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

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