Businesses across sectors have become increasingly reliant on technology to conduct operations. However, any digital presence —no matter how small—presents a cybersecurity risk. Whether a business trades online, stores or processes data, or simply uses email, it could be at risk of a cyber attack.
Unfortunately, cyber breaches can result in 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. Although larger organisations may have more data that’s attractive to cyber-criminals, SMEs are often considered an easier target. Indeed, threat actors may initially target smaller businesses’ software to gain a foothold into larger businesses through supply chain attacks.
- 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 and lack the technical expertise to implement and manage effective security measures. Both factors make SMEs susceptible to cyber-attacks.
- SMEs’ employees may leave them 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.
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 can be vital in minimising downtime, restoring data, and limiting financial and reputational harm. Moreover, cyber-insurance highlights an organisation’s dedication to safeguarding client data, which stakeholders and customers may favour.
Contact us today for further small business insights and robust insurance solutions. Call us on 01234 268818 or complete our contact form and a member of our team will be in touch shortly to discuss all your Cyber Insurance requirements.
