Do Startup Hedge Funds Need Cyber Insurance?
You’re about to launch a fund or thinking about launching a hedge fund and are thinking about insurance.
D&O / E&O are must-haves, of course. They protect the GPs from claims which may arise alleging certain wrongful acts in managing the fund. And many of your investors will want you to have at least this coverage.
But what about cyber insurance?
Is that something important? Is it important for a startup fund?
In this post and video I’m going to talk about:
So, do startup hedge funds need cyber insurance?
The short answer is yes.
The long answer is definitely, yes!
And here’s why.
Threats from cyber attacks continue to grow daily. Some of those threats like Ransomware can be random. Meaning hackers are sending out millions of phishing emails every hour looking to hook one user into clicking a malicious link so they can seize control of that user’s network and extort a ransom payment from the user’s firm.
But some attacks are targeted, meaning that hackers are carefully selecting target victims in an effort to infiltrate their network to either steal data, steal money, or as I mentioned inflict ransomware in a network to extort money from the business owner.
Who are the types of firms that are targeted?
You guessed it, those with money or access to money. Even your client’s money.
At the end of the day, hackers are just interested in money. The mayhem they cause is just a means to their end.
In this paragraph, I’m going to discuss why cyber insurance is important, even for a startup hedge fund?
For two reasons.
- Most cyber policies provide a bucket of resources – expert help when you need it most to help stop an attack and to recover from it. This may include access to IT experts, forensic experts, public relations experts, legal experts, etc. to help you comply with regulatory requirements and neutralize the threat.
- Cyber-attacks are costly events and a cyber policy pays for most of the expenses and experts I just mentioned to quickly restore your firm.
Take an example of ransomware. What would it cost your firm for every day that you were unable to operate, trade, or speak to clients because you couldn’t access your network? How would you comply with the various federal and state regulations surrounding attacks? And does it make sense to pay for a ransom out of pocket when insurance is available? What would investors think if they learned of an uninsured breach?
Here’s the bottom line.
Cyber insurance is affordable and relatively easy to obtain. The right cyber policy affords very broad protection against the threats we face today and tomorrow. It’s really not a matter of when you’ll be attacked but when and how badly. All the IT infrastructure you may have is great, but it still does not make you and your firm bulletproof. IT experts agree that the hardware and software they install to protect your networks need to be backed by cyber insurance as a failsafe.
Want to find out what cyber insurance would cost you and your firm?
Why not give me a call or drop me an email. In that conversation, I promise no hard-core selling. Just a conversation to gather some preliminary information we’ll need to quote your cyber coverage. From there, I’ll go out to the market, and get back to you with some recommendations. Fast, simple, and easy.
Have other questions regarding hedge fund insurance? As a specialist in financial service firms, we’re here to help you better understand your risks and get you the protection you need.
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