Financial loss, business disruptions and loss of clients' trust are just some of the consequences businesses face when they fall victim to hackers, not to mention the stress of such an event. Cybersecurity measures like using 2-step authentication, antivirus software and cloud services for storing data are essential if you want to protect your business from cyber threats. Cyber risk insurance could help you limit the financial damage of an unpreventable cyber attack.
Cyber threats: why small business faces greater risk?
According to the Canadian Federation of Independent Business, close to one quarter of small businesses in Canada have experienced cyber attacks since March 20201? Small and medium-sized businesses are considered choice targets because cyber criminals see them as an easy access point to bigger businesses with highly secure IT infrastructure. Hackers find them very appealing because a substantial amount of financial data may be stored on their servers, including personal information belonging to clients, employees, suppliers, volunteers, shareholders and other stakeholders.
The methods cyber criminals use are numerous and varied. Their most common tactics are:
Real-life phishing scenario
A hardware store employee distractedly clicks the link in an email he's just received. That simple click creates a breach in the company's IT system, giving malware a point of entry. The result? Total paralysis of the company's IT system and a disruption in their operations for 10 days.
Scenarios like this are becoming increasingly common. Using scam emails as a phishing tactic, cyber criminals are able to penetrate the IT systems of both big and small businesses alike.
While business owners are doing what they can to adopt preventive security sound practices, the increasingly sophisticated techniques hackers use are making cyber incidents a risk that businesses now face on a daily basis. With businesses no more than a click away from a cyber attack, cyber risk insurance would seem an interesting complement to any business's cyber security arsenal.
Why get cyber risk insurance?
Cyber risk insurance could help you limit financial consequences and disruptions to your business resulting from cyber threats, such as an attack that blocks access to your IT system.
What may be covered
Cyber risk insurance may cover the cost of:
- A supplier to negotiate when a ransom demand is made and, if necessary, pay the ransom
- Identity restoration and reconstitution of lost or corrupted data or damaged software
- A defence in the event of legal proceedings
- Reputation management
What may be excluded
Cyber risk insurance generally does not cover:
- Future financial losses
- Losses associated with the theft of intellectual property
- Costs to improve internal IT systems, including security software upgrades
Nearly half (46%) of the small and medium-sized businesses that experienced a cyber attack said the incident cost them more than $100,000, according to the Insurance Bureau of Canada2. While all types of businesses are exposed to cyber risks, they aren't all equipped to handle them the same way. Our damage insurance agents at The Personal can help you find insurance solutions that will meet your specific needs. If you have questions, call to speak with an agent today.
For more information on insurance solutions for handling cyber threats, check out the Cyber Risk Offer from The Personal.
Do you need cyber risk insurance for your business?
Never before have businesses been as vulnerable to cyber threats as they are in today's digital world. Nowadays, many companies do the majority of their business online, but it leaves them increasingly exposed to the risk of a cyber attack.
Certain conditions, exclusions and limitations may apply. The situations presented are fictional examples and are provided for illustrative purposes only.
1. Canadian Federation of Independent Business, February 2021, Cyberfraud in Small Business
2. Insurance Bureau of Canada, July 2019, Cyber Security Poll