Every year, the number and types of cyber threats continue to grow. From malware to worms, and Trojans to bots, the risks are daunting for small businesses to keep up with. In fact, nearly While not all breaches cause damage, it only takes one to put your customers’ personal information, your assets, and your ability to do business at risk. Here are a few must-know details to prepare and protect your small business against cyber threats.
Small Businesses Are Not Immune to Cyber Attacks
Does your business have a website? Do you use social media, store your company information electronically, or sell products and services online? If so, cyber insurance is a must — especially if you’re a small business. Since smaller operations are less likely to invest in the sophisticated cyber security that larger corporations, they are actually more susceptible to attacks. In fact, 71 percent of cyber attacks hit businesses with fewer than 100 employees.
The Financial Impact of a Data Breach is Significant
Take a moment to consider how many electronic customer records you have. According to a recent report, the average cost per lost or stolen record after a data breach is $225. Of course, this number could be more or less depending on your particular industry. For example, the average cost for lost and stolen records in the healthcare industry is $380 per record. In financial services industries, it’s $336. Retail and hospitality businesses, on the other hand, pay less, with average record costs of $177 and $144, respectively. It’s important to ensure your business is financially prepared if you suffer a data breach.
Standard Insurance Policies Typically Do Not Cover Cyber Attacks
You may think your business owner’s policy (BOP) has you completely covered, but the truth is that you could have significant gaps in protection — particularly from online threats. For instance, while your BOP covers the theft of physical property, like furniture or equipment, coverage does not apply to intangible property, like electronic data. Consider what you can afford in terms of downtime, investigation, and recovery. A single breach could cost you millions in legal fees, regulatory fines, lost business, breach notifications, and more.
Cyber Insurance Can Fill In Coverage Gaps
If your business does suffer a data breach, cyber insurance can help protect your business in two ways. First, your policy can help cover direct expenses, including:
- Notifying affected individuals that their information has been compromised.
- Contracting with computer forensic experts to determine the origin and extend of a privacy breach.
- Retaining a public relations or crisis management firm to control potential adverse media and reputational attention.
- Providing identity-theft restoration services for individuals whose identities may have been stolen or misused.
- Covering fines and penalties (where insurable by law) by a government entity or the payment card industry (PCI) due to breach of privacy regulation.
Second, if your business is sued as a result of a data breach, you will have to contend with expenses related to the lawsuit. Your policy may also cover costs to restore or re-create your data and systems if they are damaged or lost, replace business income, and resolve extortion or ransom demands from someone threatening your computer network.
In today’s digital world, cyber insurance is a must. But since policies differ by company, it’s important to talk to your independent insurance agent to determine what is and isn’t covered for your business. Get in touch with an agent today.