In the first seven months of 2011, a number of companies and institutions reported large-scale data breaches. The causes of the breaches range from misplacement of data by employees to malicious hacking by organized hacker groups. These serial breaches have led some commentators to nickname 2011 "The Year of the Breach." 

In February, Nasdaq reported that its confidential data sharing service had been compromised. In March, the security firm RSA revealed that data related to its popular SecurID token technology had been stolen in a cyberattack.  In April, Epsilon, the world's largest email marketing provider, reported that data on customers of 50 retailers, including the Home Shopping Network, Best Buy, Target, and Verizon, were exposed to an unauthorized entry into Epsilon's email system.

Also in April, the Office of the Texas Comptroller realized that it had inadvertently disclosed the Social Security numbers of 3.5 million people. In May, Citigroup reported that hackers had obtained information on over 360,000 credit card accounts. In June, a programming bug left cloud service provider Dropbox's 25 million user accounts accessible with any password. In July, the Pentagon revealed that it had suffered massive losses of sensitive data after a cyber attack by a foreign government. 

Sony fell victim to what has been called the largest data breach ever, affecting nearly 77 million users of Sony's Playstation and Qriocity services by an organized group of hackers. Sony predicted that breach remediation measures alone would cost the company at least $171 million.

In a white paper released on August 3, the security firm McAfee noted that "every company in every conceivable industry with significant size and valuable intellectual property and trade secrets has been compromised (or will be shortly), with the great majority of the victims rarely discovering the intrusion or its impact. In fact, ... the entire set of Fortune Global 2000 firms [can be divided] into two categories:  those that know they've been compromised and those that don't know yet."

This spate of data breaches has brought renewed attention to cyber-insurance - a specialized insurance product intended to protect companies against costs due to hacker attacks and data breaches.

-Lexology, August 8 2011

Contact us if you would like to learn more about cyber liability insurance.