California Is ‘No. 1 Target’ In US For Cyber Crimes
Harris says that cyber criminals have set their sights on the state for its “wealth and innovation,” adding that criminals are turning to cybercrime to target businesses and financial institutions. Most of the crime rings originate from Eastern Europe, China and Africa, Harris added.
“California is a global leader on a number of fronts and, unfortunately, transnational criminal activity is one of them,” the report admitted. In what is being called the first report to show the true effects of international cyber crime on individuals and citizens, the findings show that “California leads all states in the number of computer systems hacked or infected by malware, the number of victims of Internet crimes, the amount of financial losses suffered as a result and the number of victims of identity fraud,” IJ reported.
One huge area of vulnerability: theft of intellectual property “because of its [California’s] leading role in developing new technologies and mass-media entertainment.”
“Not surprisingly, transnational organized crime has tapped into this new criminal frontier,” the report states. “Many of these breaches have been tied to transnational criminal organizations operating from Russia, Ukraine, Romania, Israel, Egypt, China, and Nigeria, among other places.”
Also making California an obvious target for cyber crimes, are the state’s $2 trillion gross domestic product (GDP), heavy foreign trade activity, and the shared border with Mexico, which earn the state the dubious distinction of being a hotbed for international money-laundering schemes. The report estimates that more than $30 billion is laundered through California’s economy on an annual basis.
More than ever, the report makes a strong case for why businesses and individuals should think about adding cyber insurance to their insurance portfolio.
Stores like Target have already had to suffer massive data breaches that they’re still trying to recover from. When a business, in particular, is hit by a cyber attack, it compromises the trust that customers have in conducting transactions through that company.
When buying cyber insurance, notes Kristi Singleton of the Association of Corporate Counsel, it’s important to buy both first-party and third-party coverage. Singleton recently shared a glimpse at both types on her blog:
“Generally speaking, first-party risks are potential costs for loss of or damage to the policyholder’s own data, or lost income or business because of a data breach or cyber attack,” Singleton said. “Potential categories of first-party losses include … physical damage to, loss of, or loss of use of data and software only, whether caused by third-party, contractor, employee/former employee, state actor, or ‘cyber war’ or ‘cyber terrorism’; … corrupted, lost, stolen, or ransomed data resulting from data theft, data breach, or virus; … loss of use of data as a result of software failure, network interruption, or denial of service attack; and … an inability to conduct business because of loss of software, data, or network access.”
In contrast, third-party risks “include the policyholder’s potential liability to clients or to various governmental or regulatory entities. These potential risks include lawsuits or claims from third parties resulting from a data breach or other cyber event.”
Singleton continued: “A company’s optimal cyber-security policy would contain coverage for both first and third-party claims.”
(Read more of her tips here)
Additionally, companies should be taking every step to prevent attacks from happening. As cyber crimes persist — and they’re expected to get much worse — it could ultimately affect policy outcomes as to whether the business has taken reasonable security steps to ensure the data of its customers and clients.
While the new report on California’s increased risk of transnational cyber security is disturbing to businesses and individuals throughout the state, the fear of a cyber attack is one that should not be exclusive to this region. Mankind’s global dependency on technology has made cyber protections a necessary part of doing business. Cyber insurance and an increased drive toward preventive measures, are the best tools that a company or individual has in their arsenal. Are you covered?