Cyber: First and Third Party Risks
Cyber, Property & Casualty, Risk
Know the Difference Between First and Third Party Cyber Risks
A cyber breach can impact a business in a number of ways – and not all risks are created equal. Assessing the types of risk your company is exposed to and knowing how those risks affect your organization can help in building a solid coverage plan to suit your needs.
First party risks are direct losses incurred by your organization because of “injury” to electronic data or systems as a result of acts from others. Potential claims from first party risks include:
- Cost to identify and fix the problem
- Expenses to protect customers, including notification and credit monitoring costs
- Other expenses to mitigate loss, including public relations and publicity costs
- Theft of data or intangible property
- Loss of future income
- Cyber extortion
Third party risks include liability for financial losses or costs sustained by others resulting from internet or other electronic activities – essentially, damages for allowing a breach to happen. Potential claims for third party risks include:
- Defense expenses
- Damages resulting from customer suits or law suits from others for personal/content injury, intellectual property claims, professional services, and injury from a security or privacy breach
- Damages resulting from regulatory fines or penalties
