Cyber threats have reached an all-time high, posing a critical risk to not only large corporates, but also SMEs. And cyber attacks and scams are not just increasing in frequency; they’re becoming more sophisticated and targeted.
For many SMEs, a single cyber attack could mean serious financial loss, reputational damage, and, in some cases, even the end of the business.
So not only is it vital that you have a robust defence in depth approach to cyber security, but also a comprehensive insurance policy.
We advocate having this type of insurance in place and argue that it should automatically be part of your business insurance package, much like professional indemnity, public liability and employers’ liability products.
Why SME cyber attacks are on the rise
While a successful attack on a larger business may result in better financial gain for a cyber criminal, one reason SMEs are increasingly targeted is due to limited cyber defences compared to larger corporations. This makes you appealing targets for cyber criminals and make no mistake, taking the view of ‘it will never happen to my business as we are too small’ just doesn’t cut it anymore.
Plus, the types of cyber threats range widely, including:
Phishing attacks:
Often disguised as legitimate emails or messages, phishing scams trick employees into sharing sensitive information.
Ransomware:
Attackers encrypt your data and demand a ransom for its release.
Data breaches:
Unauthorised access to company data can result in stolen client information, financial losses, and compliance issues.
And there are many more. And for SMEs, even a minor breach can result in thousands of pounds in recovery costs, not to mention the damage to customer trust and business reputation.
What is cyber security insurance?
Cyber security insurance, or cyber liability insurance, is designed to cover the costs and damages associated with cyber attacks. It can help offset the financial impact of a cyber incident, covering a range of expenses related to data breaches, business interruption, legal fees, and more.
Why cyber security insurance is essential for SMEs
While preventive measures such as firewalls and regular software updates are critical, no system is entirely immune to a cyber attack. Cyber security insurance provides a safety net, helping you to recover quickly and minimising the damage from a cyber event.
Without insurance, you may face substantial out-of-pocket expenses, which could be crippling, especially for businesses with limited cash reserves. In addition, having insurance often strengthens a company’s credibility with clients and stakeholders, showing a commitment to safeguarding their data.
What should cyber security insurance cover?
A robust cyber security insurance policy should offer coverage in these key areas:
1. Data breach costs:
This includes expenses related to investigating, containing, and reporting a data breach, as well as the cost of notifying affected parties and providing credit monitoring services for customers, if necessary.
2. Business interruption:
A cyber attack can disrupt normal business operations, leading to lost revenue. Insurance can cover the income lost due to downtime, helping keep your business afloat during the recovery process.
3. Cyber extortion and ransomware:
Many policies now include coverage for ransomware attacks. This covers ransom payments, negotiation costs, and expert assistance in handling the situation.
4. Legal and regulatory expenses:
A data breach may result in legal action or regulatory fines. Cyber insurance can cover legal fees, court costs, and any fines imposed by regulatory bodies.
5. Public relations support:
Managing public perception after an attack is essential. Some policies include coverage for crisis management and public relations assistance to help maintain customer trust.
How to find the right cyber security insurance policy
While we strongly advocate for putting in place a robust cyber insurance policy, we aren’t experts in finding the cover that is right for you.
However, it doesn’t have to be complicated and here are a few tips to help you secure a policy that meets your needs:
1. Assess your risks:
Conduct a risk assessment to understand your business’s vulnerabilities. Work with your IT team or IT support provider to identify the areas where your business is most at risk.
2. Compare policies:
Cyber security insurance policies vary greatly, so it’s crucial to shop around and compare policies. Look at coverage limits, deductibles, and exclusions carefully.
3. Seek expert advice:
Consulting an insurance broker who specialises in cyber security, or indeed SME insurance, can be invaluable. They can help identify coverage tailored to your specific business risks and provide insight into emerging threats.
4. Evaluate the insurer’s reputation:
Choose an insurer with a solid reputation and proven experience in handling cyber claims. Quick response times and knowledgeable support can make a significant difference in how fast your business recovers.
5. Review your policy annually:
Once you have a policy in place, your insurance provider should automatically inform you of its impending renewal. But as cyber threats evolve constantly, make it a point to review and update your coverage each year to ensure it aligns with your current risk profile.
Final thoughts
As cyber threats continue to rise, you must be proactive in protecting your digital assets. In our opinion, cyber security insurance is no longer just an option; it’s a business necessity. Taking the time to understand the coverage you need and selecting the right policy can mean the difference between bouncing back from an attack and facing potentially devastating consequences.
For a comprehensive approach, consider pairing insurance with a proactive cyber security strategy, working with an experienced IT support provider. By combining strong preventive measures with the right insurance coverage, you’ll help ensure your business can withstand today’s ever-growing cyber threats.
