Among the many areas of risk faced by businesses, cyber risk could be considered a frontier area. While the nature of the risk has yet to be fully understood, being targeted by a cyberattack is all but inevitable.
While larger organizations have sophisticated cyber security to fight a cyberattack, small and medium-sized companies have become the primary targets for hackers because they are perceived as having fewer cyber defenses.
When a breach occurs, having a fast, efficient, and effective response can help limit losses and provide the information needed to make decisions and act.
Furthermore, cyberattacks can cost thousands of dollars, and cyber liability insurance can significantly impact a small business’s ability to navigate and survive these attacks.
Why Hackers Target Small Business
Amid the increasing prevalence of cyberattacks on companies, hackers target small businesses because they have fewer security solutions to prevent attacks.
According to a Nationwide Survey, 83% of small business owners offer employees the option to work remotely, yet only 50% of small business owners have updated their remote security protection.
Real-Life Cyber Claim Example
Consider this real-life example of a cyberattack on an organization:
After more than 30 years in business, a medical practice management company started its day like any other, only to realize it couldn’t access any of their computer systems. The company’s IT staff discovered that nearly all their files, including their backups, had been encrypted.
Shortly after the discovery of the incident, their cyber insurance provider and a dedicated digital forensics response team, Coalition Incident Response (CIR), got to work to help the company recover. Unfortunately, CIR quickly determined that the company had been infected with HelloKitty malware. This dangerous ransomware variant is known to exfiltrate the data of its victims before encrypting it. With their backups fully encrypted and without any other options to restore their operations, the company decided to pay the ransom to restore their functions.
Fortunately, CIR was able to negotiate the ransom demand down by nearly 75% from $750,000 to $200,000 and proceeded to help the company restore all of its data. In addition, the costs to respond to the incident, recover lost data, and pay the extortion, together with the lost income resulting from the incident, were covered by the company’s cyber insurance policy with Coalition.
Claim Scenario provided by Coalition
Preventing a Cyberattack
For small businesses hoping to ensure their networks can minimize or prevent an attack, several types of antivirus security software are available, with hardware and software-based firewalls.
Small business owners should invest in data backup systems separate from the current operating system, encryption software, and multi-factor authentication or password security software.
In addition to the software solutions, small businesses should adopt certain security hygiene practices: Keep software up to date, educate employees, implement formal security policies, and regularly communicate what not to do.
Lastly, practice your cyber defense response plan; a cyberattack is inevitable with all the best efforts. According to the National Cyber Security Alliance, nearly 60% of all small businesses close within six months of a cyberattack. Therefore, it is paramount that your organization has a plan in place to respond quickly to minimize damage.
What is Cyber Liability Insurance?
Cyber Liability Insurance can provide a team of cyber experts the ability to respond quickly to a data breach, including forensic experts, attorneys, breach response specialists, and credit monitoring companies.
Cyber insurance is a tool to protect the corporate balance sheet from losses not typically covered under traditional insurance policies.
In addition to first-party costs like forensic investigation and notification, cyber insurance also extends to third-party claims alleging unauthorized disclosure of personal information or other confidential data.
Take Action to Safeguard Your Company
Find out how Mason-McBride can help protect your business and request a proposal.
For helpful tips on other popular topics, check out articles on:
- Decoding E&O Insurance Policy Language
- Ransomware Developments
- Cybercrime Targeting Small Businesses
- Cyber Coverage Exclusions
Article By Jamie Parry