Cybersecurity is fast becoming a critical component of business processes as hackers become more sophisticated. To demonstrate this need, phishing attempts increased by 61% in 2022, and there were noticeably more attacks on mobile devices and messaging apps.
Small and large businesses alike should be cautious of common myths that could harm their operations as they strengthen their security. Some areas of cybersecurity may be better defined, and there are ways for organizations to use cyber insurance to successfully address these rising risks, in my experience across industries.
Cybersecurity VS Cyber Insurance
Companies are exposed to losses resulting from these more destructive assaults due to the misconception that cybersecurity is equivalent to cyber insurance. Cybersecurity can help prevent systems from being compromised but cannot make up for what has already happened, just like a brilliant mechanic can keep your car running smoothly but cannot protect you when you are in an accident.
When that happens, insurance kicks in. As cyber security aids in the proactive protection of a firm’s network, cyber insurance aids in the funding of the costs and services required by a company following an attack.
Information On Cyber Insurance
Cyber insurance, also known as cyber liability insurance, can cover anything from business interruption to cyber extortion and is especially useful for responding to data breaches that endanger client information.
This type of insurance can assist your business reduce a variety of attack-related losses and improve future defenses. For instance, if a business suffers a data breach, its cyber insurance coverage might assist in covering the cost of legal bills, PR expenses, and the hiring of experts to determine the cause of the breach in order to stop further attacks. Companies should take the time to carefully consider their options because coverage might varies greatly amongst providers.
Smaller businesses should evaluate the biggest risks to their operations because they might not require all types of coverage provided by cyber insurance providers. More insurance doesn’t necessarily imply that you are more protected.
It’s crucial for businesses to understand what cyber insurance excludes. This includes property damage (even if the damage or inability to use the property is caused by a computer intrusion), criminal behavior, or willful deceit committed by the firm itself. However, it won’t pay for losses brought on by interruptions that aren’t cyber-related, such energy outages and bad weather.
I think it’s best practice for companies to buy general liability and professional liability insurance to fill in these gaps and ensure they have a complete protection strategy.
The True Value Of Cyber Insurance
Businesses should remember that although if cyber insurance is an additional expense, the cost of the insurance will always be much less than the cost of a potential repair due to an attack or breach. This is particularly true when it comes to digital breaches, where firms must cope with reputational harm in addition to actual damages like lost revenue from downtime or outright theft.
As an illustration, in 2021, 8.2 million Cash App users discovered that their information had been stolen due to a data breach and they brought a class action lawsuit against the mobile payments provider. The lawsuit underlined the delayed notification users received and the additional injury it caused, in addition to charging the corporation of negligence and inadequate security procedures. In the past few years, hackers have also had an impact on other big businesses, like Microsoft and LinkedIn.
Small businesses are increasingly becoming targets of cybercrime since they typically have less security and resources to monitor and secure their data as well as the data of their clients. However, only 40% of organizations have any kind of cyber insurance, with major companies adopting it more commonly (58%) than small enterprises (21%), indicating that they are less inclined to buy it.
A company should, at the absolute least, have rules and guidelines in place to educate its staff and incorporate procedures for managing assaults when they do occur, even if it decides against buying cyber insurance.
How Cybersecurity Measures Can Be Supplemented by Cyber Insurance
Cybersecurity isn’t a replacement for cyber insurance, and vice versa, but the two together can assist businesses in creating a solid defense against cybercriminals and reducing their vulnerability. Cyber insurance can give more comprehensive protection for cybersecurity businesses and the services offered by any B2B company. Companies may concentrate on their core operations with the assurance that they are protected from both internal and external attacks by malicious actors as well as any mistakes or oversights made by the company itself.
Today, businesses should see cyber threats as a matter of “when,” not “if.” Companies should make use of all the resources at their disposal while creating their plan of defense in order to effectively manage risk and reduce any potential losses. In my opinion, cyber insurance should be viewed as an essential tool in a company’s toolbox to help it navigate a rapidly changing digital environment.