1.5 Describe the Purpose of Cyber Risk Insurance 350-201 Practice Questions (Page 2)

Questions 6–10

1. 6expert · hard

   A company is negotiating a cyber insurance policy. The insurer offers a $5 million aggregate limit with a $1 million sublimit for ransomware and a $250,000 deductible. The company's risk assessment shows a potential ransomware loss of $3 million and a separate data breach loss of $2 million in the same policy period. The company wants to maximize coverage for both incidents. Which policy structure would best address this need?

   • AAccept the offered policy because the aggregate limit covers both losses up to $5 million.
   • BRequest a lower deductible to reduce out-of-pocket costs for both incidents.
   • CChoose a policy with a higher aggregate limit but no sublimit for ransomware.
   • DNegotiate a higher ransomware sublimit or a separate ransomware limit, even if the aggregate limit stays the same.
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2. 7expert · hard

   An insurer is underwriting a cyber policy for a small e-commerce company. The company has a website that processes credit card payments, but it does not have a dedicated security team and relies on the web hosting provider for security. The company has never had a breach. The insurer must decide whether to offer coverage and at what terms. Which factor is most likely to influence the insurer's decision?

   • AThe company's clean breach history means it is a low-risk applicant.
   • BThe company's small size means it is unlikely to be targeted by attackers.
   • CThe company's lack of a dedicated security team indicates a higher risk of a breach.
   • DThe web hosting provider's security is sufficient to mitigate the company's risk.
   Reveal Solution Discussion Select an answer first
4. 8expert · hard

   A company is reviewing its cyber insurance policy after a near-miss ransomware incident. The policy has a $10 million aggregate limit, a $1 million per-occurrence limit, and a $100,000 deductible. The company discovers that the policy excludes coverage for attacks exploiting unpatched vulnerabilities. The company's security team finds that the near-miss was caused by an unpatched vulnerability. What is the most important implication for the company's risk management?

   • AThe company should switch insurers to avoid the exclusion altogether.
   • BThe company should prioritize patch management to ensure future claims are not denied due to the exclusion.
   • CThe company should increase its policy limit to ensure coverage for future attacks.
   • DThe company should lower its deductible to reduce out-of-pocket costs if a claim is denied.
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5. 9application · medium

   A company's CFO is reviewing a cyber insurance policy proposal. The policy has a $1 million limit, a $50,000 deductible, and an exclusion for losses caused by employee negligence. The company experiences a phishing attack that results in a $200,000 loss, and the investigation confirms an employee clicked a malicious link. What is the most likely financial outcome under this policy?

   • AThe insurer pays $1 million because the limit is the maximum payout regardless of cause.
   • BThe insurer pays nothing because the loss is excluded from coverage.
   • CThe insurer pays $150,000 after the company pays the $50,000 deductible.
   • DThe insurer pays $200,000 because the deductible applies only to third-party claims.
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6. 10application · medium

   A mid-sized manufacturer is evaluating cyber risk insurance. The CFO asks how the policy will help the company if a ransomware attack encrypts its file servers and the attackers demand a payment. The company has no business-interruption coverage in its current property policy. Which outcome best describes the primary financial benefit of a cyber risk insurance policy in this scenario?

   • AIt will cover lost profits for every day the manufacturing line is down until systems are restored.
   • BIt will cover fines from regulators for failing to protect customer data that was on the encrypted servers.
   • CIt will pay the salaries of IT staff while they work overtime to recover the encrypted systems.
   • DIt will reimburse the company for the ransom payment and the cost to restore data from backups.
   Reveal Solution Discussion Select an answer first