Cybersecurity Insurance: What you need to know
Cybersecurity insurance transfers some of the financial risk of a security breach to the insurer. But it doesn’t do a good job of covering the reputation damage and business downturn that can be triggered by a security breach.
In fact, 93 percent of small and midsize enterprises (SMEs) that have experienced a cyber incident reported a severe impact to their business. Almost all reported a loss of money and savings. Thirty-one percent reported damage to their reputation, leading to a loss of clients, as well as difficulty attracting new employees and winning new business. And nearly half reported an interruption in service that damaged their ability to operate. In spite of those figures, less than 3 percent have cyber insurance
What Is the Domino Effect?
Cybersecurity risks are uniquely challenging for small businesses due to the frequency with which these threats manifest into bona fide cybersecurity incidents, the severe business disruption and financial impacts they can have, and the limited resources that small businesses typically have at their disposal to respond and recover from an incident. This cascade can easily lead to bankruptcy due to a phenomenon we’ll call “The Domino Effect.”
Significantly more than half of all cyberattacks are directed at SMEs, and that number is steadily increasing.
Why Are SMEs Targeted?
Given the all-too-common outcomes above, the logical question to ask is: Why don’t SMEs do more to protect themselves with professional cybersecurity measures? There are two common reasons why they don’t. LEARN MORE
The types and amount of insurance that you need for your small business are based on several factors
The European Union (EU) recently enacted privacy regulations that impact any company doing business with European clients. The European General Data Protection Regulation (GDPR) affects any organization that collects data on even one European citizen. Companies should review their insurance program to ensure that data leaks are covered.
GDPR will affect companies located in the European Union (EU) and any businesses that have operations and customers there as well. Yet any company that processes or stores data related to at least one citizen of the EU could be faced with the potential of noncompliance. Many experts say that further regulations specific to the U.S. could be on the horizon.
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Information network and data security are expensive and rapidly growing exposures leading to millions of lost dollars, even when business firms have the proper IT security controls in place. Lost laptops, inadvertent emails, physical files containing personal identity information being thrown in dumpsters are examples of exposures that can happen to any firm large or small.
If you manage a company that uses a computer data base or the internet for business activities you may want to ask yourself the following questions:
- If any of the services that you provide should fail/not meet expectations could your customer sue you for damages or loss of revenue?
- Does your product or service interact or house any information that could be deemed private or sensitive?
- Do you help develop content for any of your customers?
- Do your products or services allow for interaction between users on-line?
- Do you have employees that travel outside the U.S. for business?
If you answered yes to one or more of these questions you may have financial exposures for which you may not have allocated the necessary financial resources to, in the event of a data breach or a failure of your technology product or service.
At SciTech Insurance we can help you manage these unique exposures by providing your firm with the proper insurance solutions as a means of risk transfer that will be there when you need it.
Contact us today for a no-obligation business coverage gap analysis!