Cybercrime Considerations When Insuring A Tech M&A

The growth of the tech industry is driven by the expansion of the mobile platform. However, the rise of the mobile platform places the tech industry at a distant disadvantage in the fight against cybercrime. In 2017, cybercrime was a leading risk to businesses worldwide.[1]   Cybercrime cost U.S companies $21M with damages expected to reach $6 trillion by 2021.[2]

The nature of technology places the tech industry as a perpetual target for cybercrimes. Data breaches and the extent of damage they cause have a tremendous impact on a company’s bottom line. Cyber Security insurance provides a buffer which will protect the company from the cost of cyber-attacks. Insurers consider a company’s security score when determining to underwrite an M&A deal.

To determine a company’s security score, insurers will analyze the companies 1) construction of security program and crisis management, 2) Occupancy of data management and access management, 3) Protection of their operations and responses, and 4) exposure to security breaches.[3] Adequate cybersecurity measures can decrease a company’s risk exposure. Therefore, the acquisition of cyber insurance mitigates the risk associated with cybercrimes in the tech industry and help protect the deal value.




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