This blog was updated July 2023.
At its core, a cyber-attack is any intentional attempt to have unauthorized access to a computer system to steal, disable, or destroy data, applications, or other valuable assets. Today, cybercrime is becoming the norm, and as per the Cyber Security Ventures report, the global annual cost of cybercrime is projected to top $10.5 trillion by 2025. While cybercrime is now an expected part of business operations, larger organizations can shield themselves from such attacks leaving smaller organizations attractive targets for cybercriminals.
According to a new report, cybercriminals are three times more likely to attack small businesses than larger organizations. For this reason, small organizations need to go an extra step and think beyond cyber security software for protection – and cyber Insurance may be the answer. In this article, we'll take a closer look at cyber Insurance and why it's important when it comes to cyber security for business.
What is cyber Insurance?
Cyber Insurance is a type of insurance policy that provide organizations with comprehensive coverage against cyber risks. The policy is available in first-party (for the company) and third-party coverage (protection for customers and other stakeholders) and generally covers all types of data breaches, extortion payments, cyber frauds, cyber terrorism attacks, and other malicious activities.
Additionally, cyber Insurance provides access to resources such as legal advice, public relations assistance, credit monitoring for the affected parties, and crisis management. Depending on your chosen policy, it can also cover reputational damage resulting from a data breach or other cybersecurity incident.
Is cyber Insurance worth it?
Cyber Insurance is a must-have. Any business that depends on technology to operate – or stores sensitive information on a network or in the cloud is vulnerable to cyberattacks. Just like a business insures against issues such as natural disasters, it also needs a cyber insurance coverage policy to recuperate from data breaches, thus boosting cyber security for businesses.
Reasons why Small Businesses need Cyber Insurance
Here are various reasons why small businesses should opt for a cyber insurance policy to boost the overall cyber security of businesses.
1. Small Businesses are a Prime Target
Small and medium-sized businesses are the new favorites for cybercriminals. According to research, cybercrime directed at small and medium businesses is growing at a high rate. In spite of that, only a small percentage of small businesses admit to having a cyber insurance policy. According to a survey conducted by CNBC, only 26% of small businesses in the US have cyber Insurance.
The majority of small and medium-sized businesses believe that cyber threats are primarily for larger organizations, thus making them feel immune to such threats. Contrary to those beliefs, all businesses – large or small- are targets for cyber attacks; however, hackers will always use cyber crime on smaller organizations since most are less prepared for cyber security issues.
Therefore, when accessing your choices for cyber security services, ensure cyber Insurance tops your investments list.
2. The Majority of Small Businesses Lack Adequate Security
While smaller businesses lack the resources of larger organizations, they also lack the sophisticated cyber security of their counterpart. As such, cybercrime against small businesses has grown in recent years. And since most small companies have retained the remote working culture post-pandemic, they quickly fall prey to cyberattacks – analysis shows over 255 million phishing attacks in 2022.
The tactics that threat actors have been using to exploit small companies are likely to persist as cybercriminals look for new ways to attack them. Therefore, investing in a cyber insurance policy will prevent the residual risk and offer companies extra cushion.
3. Many SMBs Underestimate the Risk
Most small and medium-sized businesses need a comprehensive understanding of the importance of good cyber security. Further, they must fully understand the potential losses cybercrimes can have on their businesses. Such losses may include:
- Cyber blackmail
- Business interference
- Liability implications
- Social engineering
A cyber insurance policy is handy for mitigating expenses associated with cybercrime. However, you must consult a certified cyber security service provider who will assess your risk factors and the type of cyber security insurance that will align with your cybersecurity business's needs.
4. You Might Lose Your Business If You Suffer a Cyberattack
A successful cybercrime can impact your business in three categories:
- Economic cost- mainly entails the theft of money, financial information, or corporate details.
- Reputational damage- can damage your business's reputation and as well erode your customer's trust.
- Legal consequence- you are required by data protection and privacy laws to secure all personal data you hold on your staff of clients. If this information gets compromised deliberately or accidentally, you may be subject to fines and regulatory sanctions.
Evidently, a good amount of money would be required to keep your business operational after a cyber attack. According to National Cybersecurity Alliance, about two-thirds of small and medium businesses go out of business within half a year of a cyber attack. However, a cyber insurance policy could hedge your company from extensive costs caused by cybercrime.
Cyber Security Requirements
For small businesses to qualify for coverage, they must meet various cyber security requirements such as:
- They must have strong access controls
- They must conduct regular vulnerability assessments
- They must have a well-defined incident response plan
- They must conduct regular cyber security employee training
- They must implement a multi-factor authentication
- They must encrypt sensitive information
Grow Your Business Cyber-risk Management With Trava
With the rapid evolution of cyber threats, having a sound cyber security strategy is paramount. However, the complexity of these procedures often forces businesses to seek help from experts who can provide quality services and advice on securing their operations from cybercrime.
At Trava, we deliver comprehensive solutions that empower organizations to safeguard themselves against cyber-attacks and cybercrimes. Our certified security experts will evaluate your business's requirements and offer invaluable advice on the most suitable cyber insurance policy to invest in. Contact us today to learn more about our services.