4.2. Hacking and cyber extortion

Hacking is an attempt to exploit a computer system or a private network inside a computer. Simply put, it is the unauthorized access to or control over computer network security systems for some illicit purpose.

Cyber extortion is an internet crime in which someone holds electronic files or your business data hostage until you pay a demanded ransom.

Video: Cyber Extortion – https://www.youtube.com/watch?v=UNCBuFJRrYk

Cyber extortion is an online crime in which hackers hold your data, website, computer systems, or other sensitive information hostage until you meet their demands for payment. It often takes the form of ransomware and distributed denial-of-service (DDoS) attacks, both of which could paralyze your business.

Cyber extortionists have several common techniques for breaking into your computer hardware, software, and networks and incapacitating them until you pay a fee.

One tactic is ransomware, which involves a hacker tricking one of your employees into clicking on a link or file within an email message. This activates the ransomware, which spreads throughout your network, encrypting your servers and data so you can’t access applications and files. The only way to restore access is to pay the hacker for an encryption key.

So-called distributed denial-of-service (DDoS) attacks involve hackers using a network of infected computers to send an overwhelming flood of messages to your web server, which effectively takes it out of service until the messaging stops.

Cyber liability insurance provides coverage to mitigate the financial impact of these attacks.

Many cyber liability insurance policies cover cyber extortion, but usually by endorsement only (i.e., an addition to your policy’s declarations page).

Such policies, called first-party cyber liability coverage, provide financial support for three purposes:

  1. To meet a hacker’s ransom demand.
  2. To pay for extortion-related expenses, such as hiring a consultant to remediate an attack.
  3. To bring damaged computer hardware or databases back to their original working condition. 

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