CYBER RISK

TRANSCRIPT

[Bruce Silverman] Everyone - Welcome back to another edition of "Managing Risk for Tomorrow Today" with Jeff Kleid. I'm Bruce Silverman. Jeff is the founder of Victoria insurance, 800-979-0176, jdkleid@eliterisk.com. Sometimes it's a tongue twister. And the website is https://vclrisk.com. He is Jeff Kleid. And the topic of the day is cyber risk. And this is becoming a very, very hot topic, a very difficult thing to manage for many, many businesses as well as individuals, Jeff, because basically, our entire lives are on the internet today, information being stored emails, very sensitive information, dark web, everything else. So let's just jump into it. How dangerous is, is what goes on in the shadows of the internet in terms of what it means to businesses and individuals and their private information?

[Jeff Kleid] Well, the answer is dangerous, right? But I think you also have to think about it this way. What information of yours or mine does somebody not have? Because they pretty much have everything, where the real issue is, when it comes to a business or their thought process on how do they have a protect themselves for years. So I don't know if you know, the term bought versus sold. But for years, you know, most insurance when it comes to business is bought, okay, and workers comp, you have to have it. General Liability, you have to have it for a landlord, you know, property coverage, you have to have it for you know, someone who's a lien holder, or someone who owns you know who you borrowed the real estate, you bought the real estate from or let's say you you're getting inventory on something like that, cyber, which is really a very traditionally has been a very inexpensive coverage.

For some reason, people are like, "Oh, I don't need to worry about that." And, and then of course, over the last couple of years, the prices have tripled for cyber insurance. Now when I say tripled - Here, let's be clear, though, they could quadruple and go up 10 times and you still, it's the best insurance you will pay for ever. If you're worried about it, where it really comes into play, though, is not your data as much as the inability to function, if you get locked out of your business, your daily business.

What what also is an issue is if you're the steward of someone else's data, you're a divorce attorney, you're a criminal lawyer, you're a CPA dealing with publicly traded companies, you think of all of that data, and if you're the one, the gatekeeper for that, and you're the one that loses all of that information, you have a lot of things you have to do. One is you have to notify all your clients to is you have to hope that those clients don't get frustrated by you because of something that you didn't do, and you couldn't control. But at the same time, their information is out there. Imagine someone who's privately settling issues, or someone who's in a civil case, or someone who's in, you know, in a you know, in a battle with their spouse or something like that, and all of a sudden, all their leverage is gone. Because you the lawyer got hacked and didn't have protection or didn't even know where to go. It's kind of similar to some some of the other, you know, episodes we've done in that. It really is. How do you prepare for it? Right?

And, the best way to do that cyber is now considered a very preventative insurance, it used to be that you would actually pay for cyber insurance, you would have a claim, you know, you would have a loss and then you claim you file a claim and then the insurance company would pay for it. Well now, most of the cyber revolves around these former security type of people.

In fact, Israel pumps out a lot of them by the way, there's a lot of like former IDF folks that go in, you know, they they're, they're all about national security and security from a standpoint of data, right? And algorithms and, and hacking and things like that. So they go and they look okay, do I want to sell the safety of a being a tech tech safety person? Or do I want to make a guarantee that you're not going to get hacked, but if you do, we're going to send a team in dropped from ropes and you know, virtually into several Mission Impossible Like, yeah, by the way we look, I mean, we had that, you know, we had that with, with AIG insuring homes and Katrina, we had that were literally mercenaries dropped out of helicopters to protect homes, not cyber related. So if you just think of that division, when you know, somebody puts you on, notice, we have your data, right? You know, like from taking, right, we have your data, not your daughter, but your data. So you do that. And all of a sudden, preventatively, you now send a team insurance pays for this team to get into the computer system and figure out how to minimize that risk, and how to hopefully restore your data. So you can at least keep working, because now you've got your shutdown, your data is gone, you're being ransom, you have to deal with it, you could fix all those problems. But at the end of the day, you also still have to tell people, you were breached.

[Bruce Silverman] It's the aftermath that you have to deal with as well.

[Jeff Kleid] So, you try to go and tell them like, I was having dinner with somebody, literally, just last week, I worked with a fairly large law firm. And they had mentioned that there was a data breach. And both the two other people, myself and another guy that were sitting at the table were like, "does anyone know?" And, they're like, "Yeah, people know," but you start thinking in your head, okay, so I didn't see it, I didn't hear about it's pretty big law firm, like, you'd think that they would have to let other people know, but at some point, they're gonna have to notify probably in the next 90 days, they're gonna have to notify every one of their clients that goes back a certain number of years, that the possibility exists, we all get them.

It's not that you don't but you know, ever since the Sony breach of, I want to say like, 2014 or 15, or maybe even a little bit before that. You have to be more efficient in how you respond to people. So you know, and, and people are like, well, "it doesn't affect me," there's actually great products coming out even for individuals right now.

We're working on a couple that we're looking at insuring but the biggest concern we have is, even though you can now point two, this is what's going to happen. This is how much your claim should be even if it's just you even it's just, you know, straight you know, Bruce Silverman doing this podcast working with us on Victoria, and you now take the outtakes that let's say, you know, you know, we turn into, you know, Harvey Weinstein's like talking to you on a thing, and, you know, you don't even realize what you have, until you now know, you know, three, five years later that you had it right, what if that data was taken? And of course, you don't want to protect the guy. But the point is, think about it, like, just from a functional thing, you know, how you're recording, you know, just all the different things that happen, you know, I mean, I've accidentally, I remember once, dial in the phone wrong, and luckily, the person who got my voicemail happened to be my right hand person. Only because we were working on a very quiet client, and we were working on a very, you know, we were literally trying to move the clients contents from one place to another, and it had to be done in night. And it was three 18 wheelers that had to move and it was all legal. But it was due to the nature of the stuff that was in there. Had someone else got that by some random thing, I dialed somebody else, anyone else missed a number or whatever. And then the next time I called, or then I accidentally touch that same number that I accidentally called, or I answered a call, you never know, it's all about data.

[Bruce Silverman] It's the world we live in today. You know, you can have conversations with businesses that sell widgets, but really, they're not a widget company. They're a data company. And it goes to protecting that data because in some cases, it's the reputation of the company that is affected by data being breached or hacked or ransomed or whatever. You know, we're talking about.

He's Jeff Kleid, the founder of Victoria insurance, 800-979-0176, jdkleid@eliterisk.com, vclrisk.com is the website. Let's finish up the conversation about what businesses and individuals can really do to protect their data, their clients data and mitigate their risk.

[Jeff Kleid] Well, I mean, first of all, it really again, it comes down to, you need to just look at your touch points. I mean, it's almost like you assess the situation, right? You look at it, and you try to look for all the scenarios you can figure out. And it's not just the data, it's now - are we making a widget that's digital electronic, that plugs into a wall, that uses a computer system in order to operate, you know, are we a printing company that that all of our presses can be shut down, or somehow they can be taken over and print something defamatory? And we don't catch it? Because, you know, it goes through a certain process. So you have to really think about everything you do, you have to think about what is my company make? Or do or, or sell or do? And so when we look at it, we go, okay, are you concerned about this? You know, are you concerned about this, and, you know, the best part about not, not us necessarily, but but all people that kind of do what I do that have been doing it for years in the insurance space.

It may be unique to you, the business owner that owns a widget company, but we ensure 10 widget companies just like you, and here's the interesting part about that is, you get mixed emotions. Some some businesses love to be proprietary, and say, I can't tell you, I'm gonna have to kill you, I don't want to kill you. So I'm not going to tell you and, and and you know, we're doing this thing where no one else does it like we do. And then, you know, you get the double secret nod to learn what they do. And you're like, I got 10 companies that do that. But I don't want to offend I don't want to take away from you. Just so you know. Yes, we're familiar with that. Really, you're you're familiar with...? so. So really, you go to your your core person and say, how do we do this? You know, you could be looking at, if you're a vehicle manufacturer right now in the EV space, it's inevitable. One person will be able to unlock a vehicle from a certain distance. With equipment. It's just It's inevitable. It's not scalable yet. So the concern is when it becomes scalable, how do you protect yourself from that? Now you've got reputation risk? Because your your product is hackable. Who wants to drive a car that people can do? You know, yeah, it happened once. But okay, starts happening a bunch of time, you know, you've got, you know, you've got your product exposure for something that could happen, because let's say it did get hacked. But let's say it also got put back the way it was before, you know, whatever. And even if you have this data that shows that it was hacked, doesn't matter. Well, then there's a flaw. So now you've got a product flaw either way. So chances are, you're not going to get that data from the auto company unless it becomes like Ford Pinto of years ago, if you remember the old gas Ford Pinto blowing up, and I know not everyone gets it. But we had a Ford Pinto. And I remember my dad.

[Bruce Silverman] You're showing your age...

[Jeff Kleid] Alright, believe me, my dad, my dad, actually, it's kind of like me, he actually was sitting in his car doing paperwork one day, and he happened to be parked right in front of a 18 Wheeler and didn't know it. And the guy pushed it, like, pushed him along. And there was a big dent in the gas tank of a 73 or 74 Pinto we had. Luckily, my dad was totally fine, but I'll never forget him coming home being like, yeah, I was just sitting there doing paperwork. And, and because the guy couldn't see him. So, what? 50 years ago? and I remember it.

[Bruce Silverman] Every once in a while, you see, you see one on the road, and you're like, wow, I thought those were all taken away. You bring up the great point is, is people just need to be conscious. And if they're in a business that has data of any kind, they need to discuss taking out a policy to protect themselves and protect their clients. That's just the bottom line. We've talked about it on other episodes, there needs to be a line item in the budget for these protections. It's really just as simple as that.

The other story has been a cyber risk. And Jeff, Jeff is one of the best in in terms of helping clients mitigate their risk in a variety of different arenas. You know, we've talked about many of them on episodes and we encourage you to go back and and listen and watch the episodes because there's always nuggets of information in all of these episodes, that can really be used by all kinds of different businesses in all kinds of different industries.

He's Jeff Kleid, founder of Victoria insurance, 800-979-0176, jdkleid@eliterisk.com. And the website is vclrisk.com. And this is managing risk for tomorrow today with Jeff Kleid. I'm Bruce Silverman. Jeff - always a pleasure to spend time with you always learning about the insurance industry. One of these days I might even get my license. But so far, I was absent that day in insurance school. So for Jeff, I'm Bruce, thanks a lot for being with us. And we'll see on the next episode of Managing Risk for Tomorrow. Today.