Why Cyber Insurance Can Protect Your Small BusinessJamie Frayer
As we near the end of 2021, it’s become clear that the COVID-19 pandemic has changed the way businesses run. Remote work has become increasingly popular among workers, particularly in a hybrid model.
Although remote work can be a more comfortable way to work for some, it also comes with risks of its own for businesses. Using personal laptops and mobile devices to work from home and using personal internet connections may present a greater risk of loss from cyber-attacks.
According to the FBI’s 2020 Internet Crime Report, the number of complaints from cyber-crime increased from 467,361 to 791,790 in 2020, with $4.2 billion being lost over 2019’s $3.5 billion.
These numbers help to demonstrate the significance of the risk for businesses – and in particular small businesses which have less financial resources than a large company to recover. A Forbes 2021 article How To Protect Your Small Business From Cyber Threats by Fabi Hubschmid reported that 60% of small businesses that experience cyber-attacks then close, (which is a stat Hubschmid reported from this 2015 report). Further, a study done by Appalachian State University and Selective Insurance found that “44% of owners or managers of small businesses have growing concerns about cybersecurity due to the impact of the pandemic,” which is no surprise since we know that 28% of data breaches are aimed at small businesses. This can be devastating to small businesses.
These statistics show us that the risks surrounding cybersecurity are only increasing, and it is important small business owners put plans in place to protect their livelihoods. But before we get into ways small businesses can protect themselves, let’s define what exactly cybersecurity and cyber-attacks are.
What is Cybersecurity?
Cybersecurity refers to the confidentiality, integrity, and availability of an individual’s or business entity’s digital assets and networks. If cybersecurity is compromised, hackers can have access to business confidential information such as patents or intellectual property, and customers’ and employees’ personal information, including (but not limited to) account information, and banking information.
There are different types of cyber-attacks, phishing being one of the biggest threats for small businesses. The U.S. Small Business Administration’s article Stay safe from cybersecurity threats defines phishing as, “a type of cyber-attack that uses email or a malicious website to infect your machine with malware or collect your sensitive information.” Typically, these emails include a link or attachment that infects your device when clicked.
Phishing made up more than thirty percent of cyber-crimes in 2020 according to Verizon’s 2021 Data Breach Investigations Report.
So, with these risks, how can small businesses protect themselves?
How to Protect Your Small Business
There are several ways to protect your business from cyber-attacks, and effective cybersecurity should have a multi-pronged approach – “defense in depth” – starting with education. Specifically, employees need to be trained on what to look out for, especially on phishing tactics, accounts should have excellent passwords with two-factor authentication, networks should be protected (ensure by having a security expert check), and antivirus software should be used, among other things.
One critical protection for yourself and your small business that should not be overlooked is cyber insurance.
What is Cyber Insurance?
According to Selective Insurance’s in-house cyber insurance expert Jeff Weaver, AVP, Management Liability, “Cyber insurance, simply put, is insurance for loss or harm resulting from breaches of your cybersecurity. It responds in a number of different ways to protect you from financial loss, reputational harm and other damaging hazards that arise from a cyber-attack.”
Essentially, in case of a (covered) cyber-attack, insurance will help ensure data or money lost can be tracked and returned if possible.
For instance, Selective’s Cyber Liability Insurance provides coverage attacks such as cyber extortion, privacy breaches, fraudulent instruction, First Party Network Business Interruption, etc.
Although cyber insurance can seem intimidating at first, independent insurance agents can simplify it for you.
Ramon Ray recently took part in a seminar hosted by Selective Insurance, where the speakers broke down cyber insurance for the audience and answered audience members’ questions. Events like this are great for making insurance accessible.
There are many different agencies that offer cyber insurance, with different plans so you can find something that works for your business, and your budget. We recommend you do find one.
According to the Selective and Appalachian State University’s study, “only 20% of small businesses surveyed carry cyber coverage.” With 44% of small business owners being concerned about cyber threats, they have not taken one of the most important steps to protect their businesses against cyber loss.
Put your worries to rest by putting a plan in place to protect your business by educating your employees on best practices and purchasing cyber insurance to protect your small business and the customers you serve.