January 5, 2012 by Canadian Underwriter
The increasing popularity of online shopping presents heightened and expanding risks for retailers, including a network outage or downtime during a busy trading period, warns Lloyd’s.
In a report, Online Shopping Delivers Greater Retailer Risk, published on its website, Lloyd’s said that with the increasing volume of online transactions, the potential for problems for retailers also increases.
The most obvious of these risks is a network outage or downtime during a busy trading period, with potentially disastrous consequences for a company’s finances and reputation.
“Traditional property insurance will not cover Internet downtime,” said Ben Beeson of Lockton. “However, specialist cyber insurance can protect against some non-physical damage losses triggered by a virus or a hacking.”
Recent years have seen a number of retailers suffer data breaches, some involving customers’ credit card information, Lloyd’s continued.
Cyber insurance will cover retailers that hold sensitive personal data, and specialist data coverage will pay for the cost of responding to a breach, including the expenses of dealing with regulatory investigations and defending civil litigation.