05-18-20 | Blog Post
On the opposite end of the spectrum, cyber crime against small business can threaten the survivability of the business itself. 58% of cyber attacks are targeted at small business and an even more onerous statistic, “60% of SMBs forced to suspend operations after a cyber attack never reopen for business.” It is forecasted by the World Economic forum that between 2019 and 2023, $5.2 trillion in global value will be at risk from cyber attacks. How do we protect our businesses?
Phishing, malware, and online credential breaches are a few examples of cybercrime that can result in private data being compromised. Private data includes account records, financial data, personal information, or healthcare information for employees, customers and business partners. Any data that is compromised creates cyber liability for the business. Business liabilities as a result of cybercrime can include customer notification costs, credit monitoring fees, regulatory fines, platform and system recovery costs and many other associated expenses. There is also the potential for lawsuits and significant damage awards as well as legal fees to defend the business. Lastly, cybercrime can result in lost revenue from damage to the business reputation and brand. With the average loss from cyber incidents growing to $369,000.00 in 2019, businesses both large and small need to review their current cyber liability insurance policies and evaluate the implications of being under insured or not insured for cyber liability. Cyber liability insurance is an essential element of business survivability and disaster recovery plans.
Cyber liability Insurance provides an almost infinite combination of coverage options to help protect the business from most forms of cybercrime. According to industry sources, the 2019 average US cost for cyber liability insurance was ~$1500.00/year per $1M of insurance with reports of up to 25% cost increases for 2020. Some insurance companies assess the risk and pricing levels for potential business clients using complex analyses of many factors including the industry risk profile, the organization’s structure, security and prevention systems/procedures, and the overall level of business compliance. Other insurance companies offer flat rate pricing based upon potential loss. The cyber liability insurance market has many options and policy restrictions including programs that vary by country, state and other location-based qualifiers.
There are multiple components of cyber liability insurance including first-party coverage (paying costs for expenses the business incurs directly) and third-party coverage (claims against your firm by persons or companies harmed as a result of the cybercrime). In addition, it is important to assure the extent of coverage for all suppliers to the business. To achieve the best level of cyber protection assurance, all parts of the supply chain must be properly cyber insured. One of the methods to determine the appropriate amount of cyber liability insurance begins with inventorying all of the data on your systems and assigning a risk profile (high, medium, and low) based upon what the costs would be should the business experience data loss or a cybercrime. Include all of the potential first-party and third-party costs. Having a qualified, experienced insurance partner is highly advised at this time as you gather information and formulate your cyber liability insurance needs.
If you’re looking for the expertise to advise your business on cloud services and the potential impacts that cyber liability insurance can have on your Data Backup and Disaster Recovery plans, Otava can help. Consider our secure, compliant cloud solutions managed by a team of experts trained in the latest security best practices. Call 877-740-5028 or contact us to learn more.
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