Reasons Why Your Business Should Have Cyber Insurance

Posted on October 28, 2020 | by alex | Posted in Uncategorized

Most SME owners think that cybercrime isn’t really much of a concern for their business. After all, why would hackers bother with small companies when they can attack larger targets like Google or eBay? Unfortunately, cybercriminals take an equal-opportunity with their approach. While they’re certainly capable of targeting large corporations, they also realise that big companies invest more on cybersecurity. This means they’d much prefer targeting multiple small businesses and extort $1,000 from them rather than hacking a big company’s mainframe in hopes of stealing $1 million.

It’s the cyberattacks like WannaCry and Petya that gained mainstream media attention for devastating government departments and multinationals. But it appears that tech-savvy crooks that prey on SMEs aren’t generating headlines which makes it even more concerning for business owners in general. This makes cyber liability insurance more important than ever as it safeguards businesses from unwanted costs due to cyber attacks.

In this article, we’ll be going over some compelling reasons why you should have cyber insurance and why it’s a good investment for your business.

What is cybercrime?

Cybercrime is any criminal act that targets a computer, mainframe, or any networked device for malicious intent.These acts are conducted by cybercriminals who range from rogue individuals to organised hack groups. They use all kinds of malware to steal data, money, and even cause damage to important files.

According to Microsoft, the global costs of damages brought by cybercrime amounts to US$500 billion (A$660 billion) annually and around 20% of those figures are from SMEs. While it can be difficult to obtain accurate data (not all businesses want to admit they’ve been hacked), it’s estimated that more than ¼ of cyberattacks are targeted towards the small businesses.

To make matters worse, the number of cyberattacks have increased exponentially in recent years. It’s estimated that around 4,000 ransomware attacks occur each day and 230,000 new malware samples are produced.

Cyber crime involves the following activities:

• Identity theft
• Cyber stalking
• Use of malware
• Use of viruses
• Computer and network hacking
• Online scams
• Phishing scams
• Fraud
• Information theft
• Extortion

Basically anyone who uses a device connected to the internet (whether it be a computer or a smartphone) can potentially be a victim of cybercrime if not careful with their browsing/internet activities.

What happens if my security is breached?

The two types of cyber attacks SME owners need to be aware of are data breaches and ransomwares. A data breach involves stealing data like addresses and bank account details from a customer or the staff. This data is then used for crimes like fraud, extortion, and identitify theft.. In the case of a ransomware attack, files get encrypted and locked up. This can disrupt business operations and cut down the flow of revenue. To regain access to the files, the business owner will have to pay a ransom (around $1,000) for the hackers to decrypt them.

Back in the day, SMEs that failed to protect any sensitive data only had to worry about suffering reputational and legal consequences in case the data breach got leaked. But in February of 2018, the Federal Government introduced the Notifiable Data Breach (NDB) scheme in Australia. The NDB scheme requires organisations and businesses to notify individuals affected by data breaches that are likely to result in serious harm.

Anyone that fails to comply with the NDB scheme can expect to pay hefty fines that can reach over $2 million AUD. Of course, complying with the scheme can result in customers filing legal claims at businesses that weren’t able to protect their data. At the very least, customers with this kind of experience will not be inclined to trust that business in the future which can greatly affect their public perception.

But I’m using a firewall. Do I still need cyber insurance?

Firewalls work great at protecting computers from cyber attacks by shielding the network from maliciou software and unnecessary traffic. To further minimise the risk of cyber attacks, we recommend following some value-based security tips like the ones listed below:

• Installing reputable anti-virus programs
• Having secure data back-ups
• Firewall technology
• Data encryption
• Introducing and enforcing sensible policies around the use of equipment (especially BYOD gear) such as smartphones and laptops

But even if you’re using a firewall (and followed the aforementione security tips), they don’t guaranteed 100% protection against cyber attacks. If major banks and multinational tech companies can fall victim to cyberattacks, anyone can.

What does cyber security cover?

The good news is that while you can’t fully eliminate the threats of cyber attacks, you can insure your business against the costs associated with it. This is where cyber insurance comes in. Cyber insurance covers you for expenses relating to the following cyber attacks:

• Interrupted business
• Hiring negotiators and paying a ransom
• Recovering or replacing records or data
• Liability and loss of third-party data
• Defence of legal claims
• Copyright infringement 
• Misuse of intellectual property online
• Crisis management and monitoring
• Prevention of further attacks

SMEs are susceptible to internet-based risks and the effects can prove devastating if you don’t have adequate insurance in place. With cyber insurance, you can feel confident knowing that your businesses is protected in case the unthinkable occurs. For more information on cyber insurance, feel free to contact us today and let us help you obtain the right policies for your needs.