Why Cyber Security Insurance is Essential for Small Businesses

Does your small business accept digital payments? Do you use mobile devices for your work? How about computers? If you’ve answered ‘yes’ to any of these questions, you may be vulnerable to a cyber-attack. If you’re a small to medium-sized business, you’re even more vulnerable. The National Cyber Security Alliance found that 70% of all cyber-attacks are targeted towards SMBs. That’s because cyber criminals view SMBs as less prepared for such attacks.

Creating a good infrastructure to protect your company can be expensive, too. It costs an average of $21,000 to hire external cyber experts. But not protecting your data can have devastating consequences. The next best option is insuring your company for mishaps. That means getting a cybersecurity insurance plan to cover you financially in case of an attack.

What Is Cyber Security Insurance?

Businesses store an immense amount of data. That could be in a personal laptop or a business computer system. They store information about their customers, financial data, and more. This data can be accessed without the permission of its owner. That could result in data breaches and the invasion of their customer’s privacy. If you own a business, and your data is breached, you will have to inform your customers, provide credit monitoring, and more. You can even lose money due to a phishing attack, or lose business data to a ransomware demand.

Cybersecurity insurance protects businesses from the high cost of data breaches and software attacks. They usually cover the expenses of customer notification, legal fees, credit monitoring, and fines. Some even cover the cost of data loss due to a misplaced laptop.

Who Needs Cyber Security Insurance?

Anyone who keeps the following precious data:

  • Medical or financial data
  • Confidential customer data
  • Social security data or driver license numbers
  • Customer names, phone numbers, email addresses
  • Business secrets or Intellectual Property (IP)

Why Do SMBs Need Cyber Security Insurance?

Cyber-Attacks Are Expensive

According to a study from Kaspersky Lab, the cost of cyber incidents for SMBs averages out to the following:

  • $68,000 for issues with viruses and malware
  • $188,000 for targeted attacks
  • $83,000 – Loss of devices with sensitive data
  • $79,000 – Misuse of IT resources by employees
  • $21,000 – Loss of business

As you can see, a cyber attack can be very expensive, especially for SMBs. The National Cyber Security Alliance reports that 60% of small and midsized businesses that are hacked go out of business within six months.

Small and Mid-Sized Companies Have Weak Security

These businesses keep data that’s valuable to hackers, such as credit card numbers. But according to the survey, there’s a lack of security measures and trained personnel to adequately this data. This weak infrastructure can lead to many issues. Many businesses also neglect using third-party services to back up their data. That makes them vulnerable to ransomware. But even if they used third-party services, they may be vulnerable as they’re still exposing their data. Then some businesses are connected to the supply chain of a larger company, this is even riskier. Their data can be used to break in into the main company’s system.

There’s a lot at stake here, but many companies aren’t able to invest in a strong cybersecurity system. Many won’t be able to tell if their system is weak or not, due to a lack of technical knowledge. That’s why it’s a good idea to have cybersecurity insurance in place. While it won’t be able to stop an attack from happening, it will help you recover from financial losses by paying for attorney’s fees and other related expenses. 

Today, Cybersecurity Is a Huge Deal

Today, remote working is the norm. It will continue to be so, as it’s expected to continue to post the pandemic as well. Most employees are doing their work from their laptops and other electronic devices. Many keep their important information on the cloud. Now, more than ever before, SMBs are keeping their information in digital formats. We’re talking about payment details, the physical locations of customers, and more. It’s common knowledge that SMBs store important information. That may be why cybercrime is up 600% due to the pandemic.

One memorable incident was when malicious actors posed as the CDC (Centre for Disease Control and Prevention) and the WHO to trick people into clicking on malicious links or opening virus-laden attachments to commit a phishing attack. And these incidents take place across the world. Sina Weibo – China’s answer to Twitter, was attacked and the real names, genders, and locations of 172 million users were posted for sale on illegal web markets for just $250. Authorities are still investigating. There are many such instances and cyber experts say that there will be many more.

Recently, IBM released a Cost of a Data Breach Report, that analyzed breaches at over 500 organizations. According to them, remote work has become a major security concern. 76% of the respondents said remote work increases the time needed to identify and contain a data breach. 70% state that remote work would increase the cost of a data breach. According to the report, the average cost of a data breach due to remote working is $137,000.

We are in an increasingly digital world. Customers are demanding easier shopping experiences, as we can see with the success of e-commerce. Companies have to follow suit, or risk being left behind. But that also means there will be an increase in cyber criminals trying to take advantage of this digitalization. Even physical shops use the internet in several ways, and that opens them up to the same risks. Thus, it’s exceedingly important for companies – especially SMBs – to insure themselves from such attacks. Insurance acts as a safety net and should be a major consideration for all SMB owners. Failing to do so can be extremely expensive and irresponsible.

If you have any questions about insuring your SMB, reach out to us.