There are three risk precepts that guide decisions that we make in business and our personal lives:
— Never risk a lot to save a little.
— Never risk more than you can afford to lose.
— Always know your odds.
We use these precepts unconsciously, to make a multitude of decisions daily. As has been the case for hundreds of years, the conclusive risk management tool for the exposed is insurance. How one plans for the online business contingencies is a measure of the quality of security protection from a viewpoint of risk and value, as follows:
1. Digital risks are real, as well as real-time. As a result, corporations and IT directors must constantly seek solutions to stay ahead of potential risks arising from these emerging trends. Insuring data assets is the practical answer today, considering the risk of the data breach.
2. The value of intangible data assets. E-mail, for example, is the most pervasive form of communication and impacts every aspect of every organization. Companies produce billions of emails — more than ever need to be retained, recovered and more important not lost.
3. World' accounting standards, including the IRS (RIAA) have identified a need for the valuation of intangible assets for the purpose of the corporate balance sheet, and when valuing companies during the due diligence of mergers and acquisitions.
4. The fact that insurance industry is willing to accept and insure risks that companies face with intellectual property, and that lenders face from collateralized loans, provides external evidence that an intangible asset has value.
5. In the long run, external evidence shows that internally developed intangible assets may be included in financial reports. Initially, companies might voluntarily report these appraised values in the notes to their financial statements, then FASB shall recognize the values directly.
The bottom line value of a company is based on their risk management due to their operating continuity and their recovery costs (reputation, 3rd party liability, IP theft) attributed to data loss.
Insuring data is key to a company's net financial worth going forward.
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