Businesses across multiple sectors have become increasingly reliant on technology to conduct operations. However, any digital presence – no matter how small – presents a cyber-security risk. Whether a business trades online, stores or processes data, or simply uses email, it could be at risk of a cyber-attack.
Unfortunately, as seen on the national news recently, cyber-breaches can result in large financial losses, regulatory penalties and reputational damage. While these consequences can significantly impact organisations of any size, small and medium-sized enterprises (SMEs) may find such repercussions devastating. In fact, 60% of small companies go out of business within six months of falling victim to a data breach or cyber-attack, according to cyber-economy researcher Cybersecurity Ventures.
In the event of a cyber-event, cyber-insurance could provide SMEs with a critical lifeline. Cyber-insurance can cover the costs related to data recovery, legal defence, customer notification and public relations efforts.
Why SMEs should consider cyber-insurance
Although every business should consider the merits of cyber-insurance, there are several reasons this cover is particularly important for SMEs:
- SMEs are an attractive target for cyber-criminals
Many SMEs assume that cyber-breaches are more likely to happen to larger companies. However, according to international IT services and consulting firm Accenture, 43% of all cyber-attacks target small businesses as they are often considered an easier target. - SMEs often neglect cyber-security
Compared to larger organisations, SMEs typically have smaller budgets and limited resources for cyber-security. SMEs may also have fewer IT staff or lack the technical expertise to implement and manage effective security measures. Both factors make SMEs susceptible to cyber-attacks. - Employees may leave the business vulnerable to attacks
Many cyber-attacks stem from human error, such as employees accidentally opening attachments containing malware. Despite this, almost half of small UK businesses don’t provide cyber-security training for employees, according to IT solutions provider Proband. Poor cyber-security awareness among staff could inadvertently expose SMEs to cyber-threats. - Cyber-attacks are getting harder to spot
Phishing emails and similar scams are becoming difficult to detect now that artificial intelligence (AI) tools allow a cyber-criminal to seamlessly mimic a company’s tone, language and style. As such, the number of SMEs falling victim to sophisticated attacks may increase as AI evolves, especially if they lack the expertise to protect against them. - Cyber-attacks may have financial consequences that are too severe to recover from
The lost business, operational disruption and legal consequences of cyber-attacks can take SMEs months or even years to recover from. Even if SMEs manage to recoup the monetary loss from a breach, their brand reputation may be harder to repair.
Find out about the threats to your industry with this helpful guide:
How cyber-insurance can help
Cyber-insurance can financially protect SMEs from the devastating consequences of cyber-attacks by covering data restoration and rectification costs, legal liability from personal or confidential data breaches, lost profits and other expenses. It may also include access to IT forensics, legal experts, public relations advisors and other specialists often lacking in SMEs, helping to expedite their recovery. Moreover, some policies cover the cost of a consultant to minimise damage to an SME’s reputation and brand.
Overall, a robust cyber-insurance policy is vital in minimising downtime, restoring data, and limiting financial and reputational harm. Cyber-insurance also highlights an organisation’s dedication to safeguarding client data, which stakeholders and customers may favour.
Find out more about cyber-attacks, spam and other aspects on our dedicated webpage.
Alternatively, we have cyber insurance experts in-house, therefore if you would like to discuss your cyber needs in more detail or have a general chat with our specialists then simply complete this form and our team will be in touch.
Credit: Zywave
