Protect Your Small Business With Cybersecurity Insurance
Cybercrimes are on the rise, and according to cybersecurity firm Constella in its 2020 Identity Breach Report, attackers have shifted their focus to small businesses. There was a 424% increase in small business cyber breaches last year, and 50-70% of ransomware attacks now target small businesses.
“Cybercrime is the greatest transfer of wealth in history.” – General Keith B. Alexander, former Director of the National Security Agency, Chief of Central Security Service, and Commander of the United States Cyber Command
Small businesses are attractive targets to attackers for two main reasons:
- They have the information attackers want, and they often lack the network infrastructure that large corporations have.
- Small businesses’ security systems are easier to crack than those of larger ones, leaving them vulnerable.
How Cyber Attacks Hurt Your Business and Your Customers
Once the news of a data breach has been made public, the injured company suffers instant reputation damage — as both current and potential customers lose trust. These attacks can hold your data (and your customers’ data) hostage and quickly drain your business of substantial time and money. The average cost to businesses per data breach averaged $8.64 million in 2020. Unfortunately, 83% of small businesses have no money set aside to deal with a cyberattack.
A small business’s cybersecurity budget should be at least 3% of its total spending.
Following a data breach, customers can face identity fraud, compromised credit cards, and hacked financial accounts. In addition to undue stress and frustration, these circumstances also cost consumer victims time, energy, and their money — and plenty of it. It is estimated that cybercrime will cost the world $10.5 trillion each year by 2025. Every case of identity theft costs each consumer victim an average of $1,343.00.
What Is Cybersecurity Insurance?
Cybersecurity insurance is protection that will help your business mitigate the losses of data breaches. Policies can help with:
- Legal fees and expenses
- Notifying customers about the cyberattack
- Restoring the personal identities of affected customers
- Recovering compromised data
- Repairing damaged computer systems
- Limiting downtime caused by a cyber breach
Why Cybersecurity Insurance is a Good Idea for Your Business
Cybersecurity Insurance Helps with Expenses
On average, small businesses spend $955,429 to restore normal operations following successful cyberattacks; investigating the source of and reason for an attack alone can cost $15,000. Small businesses often don’t have the money to handle legal fees and payouts for damages to customers victimized by cybercrimes. Cybersecurity insurance can cover these and other related costs.
An estimated 60% of small businesses shut down permanently within six months after a cybersecurity attack.
A Cybersecurity Insurance Policy Saves Time
With cybersecurity protection in place, you won’t have to do the recovery legwork yourself or find an IT team to repair compromised systems and data. This is especially valuable if you are one of the 75% of small businesses that don’t have the personnel to address IT security.
Cybersecurity Insurance Protection Ensures Proper Mitigation and Repair
In the wake of a cyberattack, effective repairs require the work of IT security specialists. Human error and system failure account for 52% of data breaches, 63% of attacks leverage a weak or stolen password, and 94% of businesses receive malware via email. With so many potential breach avenues available to hackers, it’s critical that comprehensive repair includes all of them. A good cybersecurity insurance policy can cover the costs to do so.
What Cybersecurity Insurance Doesn’t Do
While this type of protection helps mitigate much of the aftermath of cybercrimes, it isn’t a cure-all. It will not absolve business owners of the responsibility of having sound data protection protocols in place. It is still the responsibility of companies to train employees on cybersecurity best practices and ensure that they have up-to-date security software installed and in use.
Some insurance providers may deny claims that involve social hacking — that is, hacking that takes place through an employee who was socially manipulated by a hacker to extract information. They may also deny claims that involve ransomware.
How to Choose the Right Cybersecurity Insurance Policy
Policy options might include data compromise protection, cyber protection, identity recovery protection, and computer and technology risk protection. How will you know what to include on a policy when so much is at stake?
Compare quotes and policies from more than one provider before finally choosing one, and never hesitate to ask questions — it could be a matter of your business’ life or death. You must understand what is and is not covered in a policy to properly manage denial of malware, viruses, ransomware, and service attacks — and to recover as much as possible after a breach.
Protect Your Business from Cybercrimes
The damage cyber attacks cause to small businesses is astronomical; the proof is in the numbers. Ensure that your business’ employees are trained in internet security protocol, and protect your business with cybersecurity insurance. Invest at least 3% of your budget in protecting your business, your staff, and your customers to limit the damage these attacks cause. Having a policy in place is far more affordable than your business becoming the next statistic in a digital world where cyberattacks cost an average of $200,000 per incident.
Protect Your Small Business With Cybersecurity Insurance
This blog article was published by Axos Bank on January 19, 2022 and last updated on January 19, 2022.