Why Cyber Attack Insurance is important for SME’s?

The most effective strategy to reduce the likelihood and impact of a cyber attack is to ensure your business is adequately prepared. 

Any kind of business that sends, stores, or processes electronic data is potentially exposed to a cyber attack. This is particularly true for start-ups and SMEs, as they typically seek to automate their tasks to reduce their costs.

In the modern world it’s likely your infrastructure and operations are underpinned by digital processes. Experiencing downtime, being extorted, having large sums of money stolen, all as a result of a cyber attack can pose a major threat to the future of your business.

Without access to specialists or the in-house knowledge to deal with malicious cyber attacks, ransomware or malware, how will your SME respond to cyber incidents?

Cyber attack insurance and incident response

Cyber attacks are becoming increasingly common and the purchase of cyber insurance is no longer limited to e-commerce sites, financial institutions and manufacturers, heavily reliant upon their digital systems and processes.

Obtaining early assistance from cyber specialists to minimise the damage of a cyber attack or breach can be invaluable. Mitigating the interruption to the business and starting the triage process early will reduce the financial impact on your business.

The first 48 hours following a cyber attack or breach is the most important. If your business does not have a specific plan to follow, the potential damage and increased costs can escalate very quickly.

Cyber insurance can offer protection against a wide variety of cyber attacks and data breaches. First and third-party financial costs and liabilities are typically covered, not to mention access to cyber specialists to mitigate the damage.

Digital processes and cyber attacks

Businesses have an increasing dependence on digital systems to operate. Consider the potential costs if your systems went offline, or there were damage your networks or data that precluded you from operating. The loss of income and costs associated to recover from a cyber attack can be significant.

It’s worth remembering that data is a valuable asset and worth protecting. It can provide an advantage to your competitors, cause financial damage through extortion, or breach regulations to safeguard personal information under GDPR. Each of the above scenarios can have significant financial consequences and reputational damage.

Employee error and social engineering

Businesses need to ensure their employees are aware of the potential threats they face, whether it’s a phishing email, sharing passwords or using an insecure network. 

Human error and coercion remain a significant precursor of cyber attacks. Employees attempting to be helpful, can be manipulated to inadvertently provide sensitive information or access to cyber criminals. Therefore, education of employees remains a key measure to ensure that security systems are not bypassed.

Cyber attack insurance can provide a range of protections for financial loss, including cover for social engineering fraud. 

SME exposure and cyber attack security

Cyber criminals do not discriminate by size of business, only the potential opportunity for financial gain. Startups and SME’s are often viewed as easier target because they have weaker controls to guard against cyber attacks.

Most businesses hold personal information on their clients and should follow the UK government advice. The Cyber Essentials initiative identifies that business should: maintain a firewall; choose the most secure settings for devices; control who has access to data and services; protect against viruses/malware; and regularly update their security patches.

With the regulatory landscape shifting in favour of penalising companies, not to mention a growing threat from evolving cyber attacks. Businesses are increasingly turning to cyber insurance to offer protection and access to professionals to mitigate their exposure.

What is the cost of a cyber attack?

The costs of a cyber attack can be far ranging and dependent on a number of factors. PWC’s global state of information survey identified the average cyber attack cost was £857,000, with 19 hours downtime.

While the reputation and credibility of your business you have built over the years is difficult to put into financial terms. However, it could arguably be one of the most valuable assets of your business.

A cyber insurance broker can identify a range of covers available from the market. The demand for cyber attack insurance is on the increase and there are plenty of insurer’s competing, that means the protections available from cyber attack insurance have become more affordable for SME’s and start-ups.

Remember, one of the most important benefits under cyber insurance, is access to specialists that can assist with the immediate aftermath of a cyber attack or breach. Don’t wait until it’s too late for your business.