Why small- and medium-sized businesses need cyber insurance now more than ever
Cyberattacks are becoming increasingly common and sophisticated, and small- and medium-sized businesses (SMBs) are particularly vulnerable to them. And many cyber scams are much closer to home than you think. In September 2022, Eagle Mountain, a city in Utah, lost nearly $1.13 million in a cyber scam, where the perpetrators posed as a vendor representative collaborating with the city on a major infrastructure project.
This incident is just one example of the many ways cybercriminals can wreak havoc on organizations. That’s why it’s more important than ever for SMBs to have cyber insurance.
What is cyber insurance?
Think of cyber insurance as your business’s safety net in the digital world. It is designed to mitigate the damages resulting from cybersecurity incidents, such as data beaches, hacking attacks, ransomware, and phishing scams. Cyber insurance typically covers financial losses, legal fees, public relations efforts, and more.
Why are SMBs particularly vulnerable to cyberthreats?
SMBs are particularly attractive targets for cyberattacks due to these reasons:
Limited resources and expertise
SMBs often lack the resources and expertise required to deploy robust cybersecurity measures. This makes them more vulnerable to cyberattacks, as they may not have dedicated IT staff or comprehensive cybersecurity strategies in place.
Despite their size, SMBs handle sensitive data, such as customer information, payment details, and proprietary business data. Cybercriminals are well aware of this and exploit the vulnerabilities in their systems to gain unauthorized access to this valuable information.
Lack of awareness
Many SMBs underestimate the potential threat of cyberattacks. They may not fully comprehend the damage a single incident can inflict on their business, including reputational harm, loss of customers, and substantial financial losses.
Many SMBs nowadays rely on digital platforms and online transactions. While this enhances efficiency, it also exposes them to a wider array of cyberthreats.
Supply chain vulnerabilities
SMBs are often part of larger supply chains, and cybercriminals target them as entry points to infiltrate larger enterprises. This can lead to devastating consequences for both the targeted SMB and the broader business ecosystem.
How can a cyber insurance policy help your SMB?
Here are some of the ways that having a cyber insurance policy in place can help your SMB:
In the event of a data breach, a cyber insurance policy offers financial security, as it will cover various costs, including but not limited to:
- Cost of investigation and forensics – determining the cause and extent of the breach
- Notification costs – informing affected parties, which often comes with legal requirements and expenses
- Legal and regulatory fees – legal assistance to navigate regulatory compliance and potential fines
- Business interruption costs – compensating for the income lost during downtime caused by the cybersecurity incident
- Recovery and restoration expenses – costs associated with restoring systems, data, and networks
Incident response support
Cyber insurance policies often provide access to experienced professionals and specialized vendors who can guide you through the incident response process. This can include IT forensics, crisis communication, and legal support to help minimize damage and facilitate swift recovery.
A cyber incident can tarnish your SMB’s reputation. Cyber insurance can cover the costs of hiring public relations experts to help manage your brand image and rebuild trust with customers, partners, and stakeholders.
Legal liability coverage
Cyber insurance can protect you from legal claims and lawsuits resulting from an incident. This includes claims related to data privacy breaches, intellectual property theft, defamation, and more.
Data restoration and recovery
If your business experiences data loss due to a cyber event, cyber insurance can cover the costs associated with data recovery and restoration, ensuring minimal disruption to your operations.
Business continuity support
Cyber insurance can help your SMB with funds and resources to maintain business operations during and after a cyber incident. This support can be crucial in keeping your business afloat during challenging times.
Customization for your business needs
Cyber insurance policies can be customized to meet your unique business needs and industry regulations. This ensures that you are covered for the risks and cyberthreats your business is most likely to face.
|Related reading: Cyber insurance: What you need to qualify for coverage|
Investing in cyber insurance is a proactive step toward ensuring the longevity and sustainability of your Utah business in an increasingly digital world. Got more questions about cyber insurance or just want to talk cybersecurity? Request a free consultation from NetWize’s experts today.