If you have a car, you probably have auto insurance, and if you have a house, chances are that it’s insured too. So if you have a business where day-to-day operations depend on a secure and reliable IT network, why don’t you have cyber insurance? Like car insurance and homeowners insurance, cyber insurance serves an important purpose.
Cyber attacks have become so frequent and widespread that unless a bank or large corporation is targeted, the media won’t devote much attention to the security breach. Therefore, if you are a smaller business and you believe that cyber insurance is unnecessary because your chances of a breach are slim to none, think again. Similar to big businesses, small businesses face their own specific set of cyber risks.
Furthermore, small businesses usually rely on less advanced data-security technologies and are therefore more attractive targets for cyber-criminals. And, if you consider that employees are your first line of defense, and it only takes one to fall prey to a phishing email or click on a link that introduces malware to your network before the whole system is compromised, then the risk of your organization’s financial stability becomes more apparent. In fact, according to a 2012 study conducted by the National Cyber Security Alliance, 60 percent of small businesses fail within six months of a security breach.
To fortify your network and save your company from becoming another victim, you can adopt some basic security measures:
Create and enforce policies to manage and protect your company’s data. Keep in mind that data security is not merely an IT problem, but a risk-management issue that should be addressed on a companywide level. Therefore, senior management should be primarily responsible for writing and implementing policies for data management and protection with IT’s input and guidance.
Acquire cyber insurance and then survey it periodically. Insurance is vital to your company’s stability should a disaster occur. Once you’ve acquired insurance, survey it at least once a year to review your protection against cyber-related risks.
Do not expect traditional insurance to protect against security breaches. Unlike traditional general liability policies that are meant to protect against damage to tangible property, cyber breaches involve damage to intangible property like information and computer software. Therefore, cyber insurance is required to protect against this type of loss. And, while first-party cyber insurance will cover costs to repair and restore lost data or software and protect against business interruption losses, the remediation process in the case of a breach can be expensive. On the other hand, third-party cyber-risk policies protect against liability and other costs related to data breaches, including breach-notification costs, liability and defense costs for civil lawsuits, and free credit monitoring for potentially affected clients.
In general, cyber-related policies tend to be compartmentalized, requiring a separate premium for specific harms. Therefore, you need to ensure that the cyber policy you choose covers all potential losses.
The expense of having insurance is minuscule compared to the expenses you’ll incur should any disaster strike. To learn more information about protecting your business, give us a call at (330) 931-4141 or send us an email: [email protected]