Technology and Cyber Risk Claims Examples

Professional Liability

A software developer was hired to provide special tax revenue collection software for a state agency in the southern US. The contract amount was approximately $11 million. The consultant failed to deliver the software in a timely manner, resulting in a significant loss of tax revenue to the state. The state agency sued and the trial court returned a verdict in favor of the state agency in the amount of $474 million, much of which was punitive damages. This is an example of a claim where the consequences of an error or omission greatly exceed the value of the work completed.

Extortion

A large, publicly traded company’s entire database was encrypted by a disgruntled employee. A ransom note read in effect: ‘try to crack the code or pay me $1,000,000 and I’ll give you the password’. The company paid the $1,000,000.

An accounting firm wanted to upgrade their office desktop technology. In the process of replacing their old computers they ‘cleaned’ the hard drives as the manual suggested prior to throwing them out. A hacker recovered the discarded computers and restored the data on three of the hard drives. He then threatened to disclose the financial records of the firm’s private clients. The firm bought back the hard drives from the hacker for a multi-million dollar fee.

Hacking

Repeated denial of service attacks by a computer hacker have virtually shut down a state’s Public Access Network Computer. The attacks have overwhelmed the computers capacity to respond to requests for an electronic handshake by sending as many as 150 bogus requests a second.

An Internet Service Provider (ISP) was the victim of a hacker attack. The hacker planted swastikas and racist messages on web pages while masquerading as the provider’s administrator, erased data on two computers and shut down the system. The ISP was unable to operate for approximately 12 hours, and files created in the several days prior to the attack were lost.

Loss of Data

A personal laptop computer stolen from a data processing center contained the account numbers for over 300,000 credit card customers of several major issuers.

A technical instruments manufacturer had a disgruntled employee delete their entire database. It cost the company $7.8 million in lost revenues and$2.2 million to replace the lost data.