Compared to large enterprises, small- to medium-sized businesses (SMBs) have constraints when it comes to IT security resources, but cyber insurance should be a high priority as SMBs are more likely to face a cyber attack that leads to disruptions and lost revenue.
The consequences of a cyber attack on a small business tend be more severe than for larger organizations, and according to Veeam’s 2023 Data Protection Trends Report, 85% of ransomware attacks targeted small businesses.
Aside from implementing cybersecurity tools, processes and employee training, SMBs must add cyber insurance to protect themselves from the financial and operational impacts of cybercrime – traditional insurance isn’t enough. Cyber insurance will cover some of the costs related to a security incident, including access to experts, as well as provides confidence to all your stakeholders that you’ve taken all the necessary steps to mitigate risk.
No matter your industry, you should have enough cyber insurance coverage in place and keep five things in mind.
Every industry is at risk: All businesses are data driven businesses, which means any type of business can be victim of a cyber attack and needs insurance coverage. Certain industries are more targeted than others, such as healthcare and financial services, but don’t think you’re immune from threats if you’re in a different sector.
Have enough coverage: It’s important to understand how much a cyber attack might cost you so your insurance policy will cover any potential data breach or attack. A study by IBM found that a small business can expect to pay to pay as much as US$3 million in the event of a data breach, but costs could be even higher if you consider any legal fees, mitigation and other IT costs, as well as loss of revenue due to reputation damage that leads to lost customers.
Your other insurance products don’t cover cyber attacks: Standard business liability policy or business owners’ policy is usually not enough to cover all cyber-related liabilities, including ransomware attacks. While standard insurance might cover some breach liabilities and employee-related incidents, you need a separate cyber insurance policy to reduce how much an incident could cost you.
Your customer and partners may require it: Many businesses require the companies that do business with them to have certain types of insurance – including cyber liability insurance.
It protects you against third-party security incidents: Even if you don’t fall prey to an attack directly, you can be affected by third-party breaches in your industry’s supply chain. If you’re a SMB that serves larger ones, you need to have risk mitigation strategies in case a partner, supplier or customer suffers a cybersecurity incident that can ripple across the supply chain and disrupt your business.
Having cyber insurance is a critical element of your overall risk management strategy, and the upfront cost of paying for it will help you to reduce likelihood of unexpected financial outlays related to a data breach.
A managed service provider with expertise in security can help you evaluate your security posture so you can not only protect your sensitive business data and avoid disruption to your business operations, but also increase your insurability.
