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Calculating the Risk of Cyber Crime

Electronics giant Sony is just one of the major companies to have fallen victim to hacking. Names and other personal data from online gamers were stolen from its servers, along with a database of tens of thousands of customers.  The attack prompted the Japanese company to shut down its PlayStation network and other services for a month.

Analysts calculate an annual loss of $3.2 billion, of which $170m is attributable to the hacking.  Sony has been working with the FBI and other authorities to investigate another "criminal cyber attack" on its data centre in San Diego, California.

Games publisher Sega have also launched an investigation after hackers broke into its customer database on Saturday.  Although no financial data was stolen, approximately 1,290,755 gamers have been affected.

Losses arising from cyber risks include the cost of recovery and data reconstruction; the cost of investigating the source of the incident, including forensic costs; replacement infrastructure and hardware costs; business interruption and loss of profits; and PR and crisis management costs.

Insurance and reinsurance underwriting company Kiln offers a product called Enterprise Risk Insurance, which provides cover for reputational harm, data assets and network security (also referred to as 'cyber' risks), and non-damage business interruption insurance (NDBI).  Kiln has also worked alongside the Chartered insurance broker Lockton, which has developed a Business Resilience product that covers online fraud, data breaches and other forms of cyber risk.

Importantly, it also compensates companies for the loss of revenue linked to the reputational damage caused by a data breach - something that Sony and Sega will have suffered from. 

Those looking for an insurance career can therefore include IT and mathematical specialists as much as those with business or humanities backgrounds.

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