This piece is by Mat Prentice, Cyber Product Leader, HSB, and it looks at the various risks surrounding hybrid working models.
The pandemic forced employers to allow employees to take computer equipment away from business premises, heralding a new era of remote working. Although some companies have subsequently mandated their staff to partially return to the office, the trend towards hybrid working remains strong as we head into 2024.
Are businesses prepared for evolving computer equipment risks?
Modern working practices pose increased risks to businesses in relation to computer equipment. Research by HSB highlighted that 46% of employed and self-employed workers have accidentally damaged or lost IT work equipment. Typical causes include physical damage from trips or falls, spillages and theft whilst commuting.
Despite these findings, a separate HSB survey revealed that over two-thirds of UK insurance brokers believe their commercial clients have given little consideration about the implications of hybrid working on their computer insurance.
Misconceptions about hybrid working and computer equipment coverage
With hybrid working seemingly here to stay, businesses should reassess whether their existing insurance policies provide adequate cover for their computer equipment. Similarly, changes made to working patterns or locations could now require a different level, or more specific type, of cover.
Whilst computer equipment can typically be insured under a commercial combined property policy, these may not fully cover all the risks. Examples of potential gaps could include cover being restricted to business premises, limited cover for computer hardware and equipment breakdowns, and data recovery costs not being covered. Laptops and smartphones are more vulnerable to accidental damage and theft, so it is recommended that businesses review whether their insurance excess is sufficient. Some specialist computer policies may include no excess in the event of a claim.
Global supply chain issues have impacted the availability of computer equipment and parts making existing IT equipment a more valuable asset. HSB’s research revealed that 55% of computer equipment issues suffered as a result of damage or loss were resolved within a week, however almost 1 in 5 respondents encountered delays of up to 4 weeks to repair or replace their equipment.
With the value of IT equipment having risen sharply, it’s important for businesses to understand what level of sum insured they need to reduce the risk of underinsurance. Switching from conducting annual to mid-term equipment valuations could provide a more accurate estimate of the cost to replace or repair computer-related assets.
Increased cyber risks – an accident waiting to happen?
Some IT measures introduced by small and medium-sized businesses during lockdown were temporary solutions to support employees to quickly transition to hybrid working. Subsequent changes made to working practices and operational system access could pose data security risks, unless IT infrastructures have kept pace with new cyber threats.
Cyber security protocols must ensure that computer equipment and information stored on it prohibits unintended and unauthorised access. IT infrastructures should be sufficiently robust to control access to computer, software and data systems and employees should regularly receive cyber security training to ensure they are aware of evolving risks and how to mitigate them.
As part of an embedded risk culture, businesses should review where all of their computer equipment assets are so they can understand their potential exposure. This should include checking they have adequate insurance cover for repairs and replacements to their computer equipment, as well as cyber protection such as data recovery following hardware failure or a full scale security breach.
Risky business
Although many businesses have adapted to modern working trends, some have been slower to understand the insurance implications for computer equipment of new working practices (such as accidental damage, loss and business continuity disruption). Hybrid working requires businesses to take a fresh look at their insurance cover, review their existing policies to identify potential gaps and changing exposures in coverage that should be addressed.
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