Many a small to medium-sized business or entrepreneur may have heard of the new form of cyber insurance and the general response is, ‘It’s not for me’ OR ‘I don’t need it!’ However, in an age where data has gained prominence and all business of all shapes and sizes have begun to use big data to drive profitability, the rise of cyberattacks has followed suit and unless you protect yourself and your business, it may be a cost too big and likely to end your business aspirations.
What is cyber insurance?
This is the process of paying for risk cover for the possibility of a cybersecurity event. The result of a cybersecurity breach is not just the loss of data and information; it will also mean fines, legal fees, and costs for e-discovery and the subsequent investigation. A serious breach can also put the entire business at risk. Therefore, having adequate cover for such eventualities is one of the best ways to spend your money in the modern age.
Why cyber liability insurance is now needed by all businesses
It may have been that in the past, only the big players or businesses felt that they needed cyber insurance. However as detailed by Proofpoint, the cost of cybersecurity events is in the billions every year, and unless you have cover for this, you may not recover financially. It is, therefore, clear that with the increase in attacks, and the fact that most general business insurance policies won’t cover cybercrime, it is critical for any business that has any value in data or in the cloud to have cyber insurance.
As more businesses move online and into the e-commerce realm, with a host of online platforms from social media to online shops and large-scale databases, they have all become targets of the ever-growing cybercrime phenomenon.
Examples of those who didn’t have cyber insurance cover
It is useful to end by looking at those businesses small and big that didn’t have cyber insurance and have either had to close down or whose bottom line has been adversely affected.
In 2017, when Mondelez was targeted by the NotPetya cyberattack, their insurers refused to pay out over $100 million in damages and losses, as the company’s policy excluded cover for war and the cyberattack was classed as a cyberwar. It is this type of fine print that makes specialist cyber insurance so highly recommended in the modern age.
CNA financial also paid over $40 million in March 2021, as the result of a ransomware attack that wasn’t covered by insurance. These losses can be catastrophic and cause widespread business collapse.
The concluding comment is to reinforce the fact that all businesses who are online need to consider what protection they have and then over and above this they need to have a safety net in place, such as cyber insurance that will serve to cover any damages to the business from such a cyberattack.