The threat of data breaches and leaks in sensitive information is fast becoming so commonplace that experts will now tell you that either your company has already suffered a breach. Or, has had a breach but hasn’t detected the intrusion. According to the Ponemon Institute 2016 Cost of Data Breach Study, the average losses incurred by companies has been steadily rising in recent years. A more worrying fact is that close to 63% of small businesses become targets of breaches and having incurred a loss of data, at least 60% are likely to close down within a few months.
The solution? Protect your business from possible losses by getting cyber security insurance. The reasoning behind this option is simple. While larger companies have the staying capacity and resources to sustain heavy losses, smaller businesses simply go under. For instance, Target, the retail company has been directed to pay $18.5 million to the 60 million entities affected by the security breach of its systems. A smaller business with fewer resources may not be able to pay up without going bankrupt.
1. You Need Cyber Security Insurance or Cyber Liability Insurance Coverage (CLIC)
As the owner of a small business, you need to take the proper steps to safeguard your company against the losses you may incur in case of a security breach. The best solutions involve using digital protection applications installed in the refurbished laptops, cellphones and other gadgets that you buy and assign to your employees. Training your employees, instituting safety protocols, and getting evaluation for your tech systems regularly also helps. But, in the event a leak does occur, cyber security insurance can help you with the costs and keep your business running as before.
Read ahead to understand the positives of insuring your enterprise against information leaks.
2. You Need Cover for the Costs of Notifying Affected Entities
According to the breach notification laws passed in 48 states, the District of Columbia, Puerto Rico, Guam, and the Virgin Islands, you must inform all the concerned entities that their personal information has been compromised. This data can include Social Security Numbers, bank account numbers, credit card numbers, their PINs, and expiry dates, driver’s license, state identification, or any other information that can be potentially misused. The costs of contacting each entity and letting them know can be significantly high. And, cyber security insurance can help.
3. You’ll Need Assistance with Immediate Expenses
Right after detecting that a data breach has incurred, you’ll need to take several steps that can prove to be expensive. Here are some of them:
- Hiring a team of expert IT forensic professionals to identify the source of the leak and trace the steps taken by the hacker through your digital systems
- Minimizing the damage by plugging the leak quickly
- Conducting credit checks of the affected entities including customers, employees, and business partners
- Hiring the services of a legal team to help you deal with the fallout of violations of regulations
- Covering the costs of lawsuits brought against your company by customers and partners
- Covering the damages awarded by courts of law
- Paying the fines levied by regulatory bodies for non-compliance of rules
- Covering the losses incurred by your company during the downtime when you need to halt operations to deal with security leak
- Covering the damages you may have to pay third parties in case of any intellectual property rights infringement occurring because of the leak
4. You’ll Need Assistance with Ransom Demands
A common form of security breach is hackers locking you out of the company IT systems and denying access until you pay a ransom amount. Such cyber criminals may also refuse to give up the encryption codes even after you pay them. As a result, you may have to reboot entire systems and incur costs of getting back the data if you haven’t created backup files. Getting cyber security insurance can help you with these costs.
Recommended reading: Why Cybersecurity Strategy Matters to Startups And Small Businesses?
5. You Need to Assure Potential Business Partners
Larger companies and other partners in your supply chain looking to do business or share sensitive information with your company might lay down the condition that you get insurance. They may need the assurance that you have the necessary protection against data breaches that could occur.
As vice president at Stroz Friedberg, a cyber security and risk management company, William Dixon reveals, “”We see cyber insurance as a baseline requirement just to be able to do business with another company. One of the standard questions we ask our vendors and service providers is: Do you have a cyber insurance policy and what are the coverages associated with that policy?”
Choose an Insurance Product that Matches Your Specific Needs
Having understood the importance of cyber security insurance, it is prudent to look for the best insurance product for your company that is relevant to the specific risks it is regularly exposed to. Keep in mind factors such as the size of your business, the industry you work in, and your business model, among others. You could also work with a specialist broker who can study the company requirements and make recommendations accordingly.
Divisional director at FINEX Global, Erica Constance advises, “No two businesses are the same when it comes to cyber risks, therefore it is key to understand the cyber risks your business faces and to ensure your cyber policy is tailored to mirror those risks.”
Data breaches are a harsh reality of today’s times. With more and more businesses moving their operations to the cyber world, the threat of hacking incidents is always present. When looking to protect your company with various other insurance products such as for fire, liability, property, vehicle, and workers’ compensation, it is advisable to add cyber security insurance to the list.
Get insured! And while you’re at it, book a Digital Leadership Speaker that can take your upcoming conference to the next level!