What Businesses Need Cyber Security Insurance?

Despite increasingly sophisticated security measures, cyber-attacks are rising. More than half of small businesses were targeted by a cyber-attack in 2022. In this article, Rigby Financial outlines why cyber security insurance is so important.

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Understanding cyber security insurance

Cyber security insurance (cyber liability insurance) provides financial protection against cyber threats.

This can include:

– Data breaches

– Cyber attacks

– Losses from cyber attacks

– Costs of investigations

– Legal fees

– PR expenses (to fight damaged reputations)

– Business interruption (if you can’t trade after an attack)

The importance of cyber security insurance for businesses

With cyber-attacks increasing, liability insurance is more important than ever.

The costs of a cyber attack can be huge.

Worldwide cybercrime cost upwards of $6 trillion in 2022.

That’s not even including the operational disruptions and reputational damage involved.

Cyber security insurance helps businesses protect against the impact of cyber threats, helping them comply with regulatory requirements like GDPR (General Data Protection Regulation).

Cyber liability insurance also provides other benefits in the event of an attack.

For one, you’ll get access to experts and resources to help you recover from an attack.

This is particularly beneficial to small businesses with no cyber security team.

Having insurance can also mitigate some of the lost customer trust and loyalty in the event of a cyber attack.

You can also save some reputation after an attack by showing a commitment to security and privacy.

What businesses are at risk of cyber-attacks?

Every business is at risk of a cyber-attack.

But some businesses are more vulnerable than others:

• Small and medium-sized enterprises (SMEs)

Small and medium businesses usually have weaker IT security.

Many also lack the security knowledge to protect themselves from popular cyber scams, making them a prime target for cybercriminals.

Cyber security insurance helps small business owners reduce the impact of a successful attack.

There are also steps small businesses can take to defend against cyber attacks, such as:

– Install firewalls on IT systems

– Use anti-virus software on devices

– Train employees against the risks of cyber attacks

• E-commerce and online businesses

The risks to E-commerce and online businesses from cyber attacks are significant

Because these businesses rely on online transactions, they’re valuable targets for hackers.Criminals will try to intercept transactions in progress to steal money or access sensitive data.

Cyber liability insurance can help cover the costs in the event of a cyber attack.

Steps e-commerce businesses can take to protect themselves include:

– Using secure payment gateways

– Using two-factor authentication

– Updating software to patch security holes

These types of businesses should also have plans in place in case of a data breach.

This should include immediately informing customers their data could have been compromised and informing the police.

These are all guidelines put down by GDPR.

• Healthcare and financial institutions

These organisations are often targets of cyber-attacks because of the information they handle.

This is usually personal or commercially sensitive data.

There are also strict regulatory rules to follow and hefty fines imposed for poor security.

Cyber insurance helps meet regulatory standards and protects against legal claims and reputation loss as a result of cyber attacks.

Some of the steps healthcare and financial businesses should take to protect themselves include:

– Using strong access controls

– Using encryption to protect data in transit

– Conduct regular security audits to find and patch weaknesses

Policies should also be in place to inform customers (and authorities) in the event of a data breach.

• Government and public organisations

Government and public organisations are frequent targets of cyber attacks.

This includes sophisticated, state-sponsored attacks.

The extremely sensitive data held by governments is highly valuable to criminals.

This is why cyber insurance is so important.

It can help with the costs of investigations, claims, changes to operations and reputational damage after a cyber-attack.

What’s included with cyber security insurance?

What you get with cyber security insurance will be different depending on what you need and the insurer you use.

But most policies include a few of the same elements:

• Coverage for data breaches and cyber attacks

Cyber insurance provides cover for the costs associated with data breaches and cyber-attacks.

This includes:

– Investigation costs

– Costs to recover information

– Communication costs

• Business interruption coverage

If a cyber-attack stops you from trading, you can use cyber insurance to cover losses.

This includes lost revenue from downtime while an issue is being resolved.

• Legal and regulatory compliance coverage

Compliance laws like GDPR require businesses to take steps against cyber-attacks.

Having insurance in place could be one of those steps to prove you’re taking privacy and security seriously.

• Reputation management and public relations support

Along with the financial costs of a successful cyber attack, there are also reputational costs.

How likely are customers to use a company that can’t keep data secure?

Cyber insurance covers any costs of fixing your reputation and rebuilding trust.

Protect your business from cyber criminals

Criminals don’t discriminate when it comes to cyber-attacks.

Large and small businesses are equally targeted, no matter what industry you’re in.

Cybersecurity insurance is an essential investment for businesses of all sizes and industries.

It provides financial protection against the costs of a cyber attack.

And it can help businesses reduce the associated risks of becoming a cyber victim.

Regardless of your organisation’s specific cyber risks, cyber security insurance can provide peace of mind and financial security in the event of a data breach or cyber attack.

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