Trade Secrets inside Critical Infrastructure companies bring huge risk!
By: Mary Guzman, Founder/CEO Crown Jewel® Insurance
December 7, 2022
In early November, Thales, a French aerospace, defense, and security firm experienced theft of over 9 gigabytes of data, which has now been posted on the dark web. Thales has denied that IT systems were compromised but has confirmed the leak and identified one source, who appeared to be an “insider”, someone with permitted access to the company’s network, although not an employee.
The sheer volume (and type of company as the target) would lead one to believe at least some of the assets were trade secrets, some of which may include critical safety and security innovation or know-how. In the case of IP theft, the company’s “cyber” policy (assuming they have one) will not cover the value of those trade secret assets, as the “valuation” clause will be an impediment to any insurance recovery for the future value of any asset, and will likely not pay for any “sunk” R&D costs. Now, the value of Thales’ trade secrets is reduced to zero (as an IP asset), because they are generally known. I’m personally much more concerned about these assets getting into the wrong hands than a bunch of credit cards!
We must, as a matter of public policy/national security, shift our focus away from privacy, privacy, privacy all the time (PII and PHI being the only digital assets our lawmakers seem to care about) towards Critical Infrastructure company management of Intellectual Property assets. And as shareholders of non-CI companies in all sectors of the economy, we should insist on more oversight of security, information sharing, and incident reporting around IP theft.
Many companies today have not formally identified their trade secrets. This is the first step in any formal risk management process. If company leadership hasn’t formally identified its Crown Jewels, how can they possibly know what they are worth, where they are located, and that those assets have proper security and legal protections around them?
Last but not least, the only insurance available to cover this type of loss is first party trade secret insurance, and the only trade secret insurance on the market is coming next month! Stay tuned for exciting news.
Confidential and Proprietary Work Product. Crown Jewel Insurance Copyright 2022. All rights reserved.
