Cyber Insurance Is Crucial For Your Business
Did you know that 59 percent of businesses don’t have cyber insurance? That’s a startling statistic, especially considering the number of data breaches and ransomware attacks that have taken place in recent years. In 2020, one in six businesses attacked were hit with ransomware, and nearly half of them paid the ransom. This number appears to be on the rise: according to the U.S. Federal Bureau of Investigation (FBI), there were 847,376 reports of suspected internet crime in 2021, a 7% increase from 2020, with losses surpassing $6.9 billion.
For businesses, these numbers are simply too high to ignore. Cyber insurance is crucial for protecting your company in the event of a data breach or ransomware attack. But what exactly is cyber insurance? How does it work? And why do you need it?
Cyber insurance is a type of insurance that covers businesses from financial losses incurred as a result of a cyber-attack. This can include anything from data breaches and cybercrime to cyber terrorism and system failures. Cyber insurance can help cover the costs of restoring lost data, repairing damaged systems, and providing legal assistance in the event of a data breach. It can also help cover the cost of business interruption, which can be significant if your business is forced to shut down due to a cyber-attack.
Why Do You Need Cyber Insurance?
There are several reasons why you need cyber insurance for your business, including:
1) To protect your business from financial losses:
As we’ve seen, cyber-attacks can be costly, and they’re only getting more common. Cyber insurance can help cover the costs of repairing damage and restoring lost data. In the event of a data breach, it can also help cover the cost of legal fees and other associated costs. The global cost of cybercrime reached $6 trillion last year, and it’s only expected to increase.
“Cyberattacks have grown in number, sophistication, and impact,” said Alessandro Profumo, the head of the Italian defense, security, and aerospace giant, at the opening of the Cybertech Europe 2022 conference in Rome. “New cybersecurity threats over the last two years have been a ‘collateral damage’ of the COVID-19 pandemic and the acceleration of digitalization it induced.”
2) To protect your customers and employees:
In the event of a data breach, your customers’ and employees’ personal information could be compromised. Cyber insurance can help cover the costs of providing credit monitoring and identity theft protection services to affected individuals. It can also help cover the cost of notification expenses in the event of a data breach. According to the European General Data Protection Regulation (GDPR), businesses must notify individuals of a data breach within 72 hours to avoid significant fines.
Similarly, in the U.S., all 50 states, including the District of Columbia, Guam, Puerto Rico, and the Virgin Islands, have data security and breach notification laws. Most states require businesses to notify individuals of a data breach, but the requirements vary from state to state.
3) To comply with regulations:
In some industries, cyber insurance is required by law. For example, the healthcare industry is subject to strict data privacy laws, such as the Health Insurance Portability and Accountability Act (HIPAA). Many financial institutions are also required to carry cyber insurance to comply with regulations. Others, such as public companies, may be required to disclose their cyber insurance coverage in their annual report.
“Many companies still mistakenly believe they can fly under the radar, perhaps thinking they aren’t high profile enough for an attack,” wrote Mark Roberts in a recent Forbes article. “While massive cyberattacks make headlines, many smaller ones do not. The harsh reality is that some companies won’t realize they have fallen victim to an attack until it is too late.”
4) To avoid reputational damage:
In the event of a data breach or other cyber incident, your business could suffer serious reputational damage. This can lead to lost customers, decreased revenue, and a damaged reputation. Cyber insurance can help cover the costs of crisis management and public relations in the event of a data breach or other cyber incident.
A data breach can have a profound effect on an organization’s reputation and bottom line. In some cases, the fallout from a cyberattack can be so severe that it puts the company out of business. For example, the 2017 Equifax data breach resulted in a loss of at least $4 billion, and the company’s top executives resigned. For those unfamiliar, Equifax is one of the three major credit reporting agencies in the United States. In 2017, they announced a data breach that affected over 147 million people. People’s Social Security numbers, addresses, and birthdays were all stolen.
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5) To get back to business:
In the event of a cyber incident, your business may be hampered or forced to shut down operations while you deal with the fallout. This can lead to lost revenue and increased expenses. In some cases, cyber insurance can help cover the cost of business interruption expenses and lost revenue. It can also help pay for the cost of hiring a third-party security firm to help you get your business back up and running.
“Cybersecurity insurance should be another item on every organization’s checklist next to secure backups, especially as cybercriminals employ more sophisticated methods to access organizations’ digital assets,” wrote Brian Greenberg in Forbes. “This way, they will be able to ensure that if and when their business-critical systems and information are compromised, they have the proper backstop to minimize the financial impact of any security breach.”
Cyber Insurance Means You Are Prepared
There are many reasons why your business should consider cyber insurance. Cyber threats are becoming more common and more severe, and the costs of a data breach can be devastating. Cyber insurance can help cover the cost of notification expenses, crisis management, business interruption, and lost revenue. It can also help you comply with regulations and avoid reputational damage. When it comes to cyber insurance, the cost of being unprepared is far greater than the cost of being prepared.
If you are looking for more detailed information and special tips regarding cyber insurance then take a look at my free eBook titled: “9 Valuable Things Leaders Should Know About Cyber Insurance”. It is chocked full of tips, tricks and information to get a better policy at a lower premium.