The Devastating Impact of Cyberattacks on Small Business
The disturbing truth is that cyberattacks are on the arise at alarming levels. Businesses in our community and across the globe are suffering significant financial impacts, lost productivity, and reputational damage as the result of cybercrime. Could your business survive a cyberattack? The encouraging news is that there are proactive steps you can take to minimize your risk.
Is Your Business an Easy Target?
43% of cyberattacks are aimed at small businesses
While data breaches at large corporations and institutions often grab the headlines, small businesses are still easy targets for hackers, and the impact of a cyber attack on a small operation can be devastating. According to Accenture, 43% of cyberattacks are aimed at small businesses, but only 14% of those businesses are prepared to defend themselves.
The average financial impact to small businesses that have been victimized by cybercrimes is $200,000. For many operating on the margin, this could easily lead them to fold within a year. Even more alarming is the fact that organizations with up to 500 employees can spend an average of $7.68 million per insider threat-related incident, according to 2020 IBM report!
Does your business have a cyber security plan?
60% of small business owners make the mistake of thinking they are immune from an attack – they are not!
According to a recent Bullguard survey, small business owners are slow to realize the importance of creating a cyber defense plan, leaving their operations extremely vulnerable to hackers. Taking proactive steps such as enhancing password security protocols and using multi-factor authentication, keeping software programs updated, regularly backing up or duplicating data that can be retrieved in the event of a ransomware attack or system compromise, and training employees are some of the critical steps you can take to better secure your data. While human error remains one of the greatest threats to data breaches, only three out of 10 small business employees receive annual cyber security training.
“It is crucial for your business to adopt clear policies for securing data, especially if your business handles sensitive client information,” says RPM Owner Michele Robbins. “Your employees are often your best defense. Ensuring that they are trained on security protocols and aware of the signs of potential hacking schemes can strengthen the integrity of your systems.”
Cyber Insurance – Peace of Mind for Your Business
Cyber insurance is designed to cover your company’s liability if data breaches occur that release sensitive information such as customers’ Social Security numbers, health records, driver’s license information or credit card numbers. Here are a few common questions regarding cyber coverage:
- Doesn’t liability insurance cover these situations?
Cyber coverage is often excluded in a general liability insurance policy. The general policy typically covers property damage and bodily injuries resulting from a company’s operations or services, not issues that arise from cybercrimes.
- I use Square. Shouldn’t I be protected from a breach since it’s Square’s Software and responsibility?
It’s a common misconception that just because you use a third-party to process your credit card transactions, you’re protected. Unfortunately, you’re still responsible for informing the public and your customers that there has been a breach. And lawsuits tend to name every possible party. Your company still needs protection.
- What does cyber insurance cover?
Legal fees: Even a small data breach can generate significant legal expenses. From lawsuits filed against the company to those the company needs to file, cyber insurance covers the many expenses involved.
Notifications: If a data breach occurs, the business must notify its customers. This could take the form of snail mailings, phone calls, emails, or other forms of communication. Cyber insurance covers the expenses incurred with these notifications.
Restoration: A cybercrime might result in one affected customer or thousands. The company might be responsible for restoring personal identities for each of these customers. Specific cyber insurance policies will ensure coverage for the cost of customer restoration.
Recovery: Data that has been compromised needs to be recovered. Whether the attack was via ransomware, stolen files, or viruses, the company under attack must expend resources to get the affected data back under its control.
Repairs: Cyberattacks often damage computer systems. Cyber insurance offers coverage for the cost to make these repairs.
The benefits of cyber insurance are becoming clearer with the proliferation of cyberattacks. In 2019, the number of small- and medium-sized businesses reporting data breaches increased to 63%. According to the computer anti-virus provider McAfee, there are nearly 500 new high-tech threats being introduced every minute.
“This is an astonishing escalation of malicious online activity that puts all of us business owners at risk,” says Robbins. “Having cyber insurance coverage is an important weapon in our arsenal, and we highly recommend this protection to our clients.”
RPM Insurance Agency can help you evaluate how much cyber insurance makes sense for your business depending on the size, complexity, and risk level of your operations. As with any type of insurance, there is not a “one size fits all” solution. RPM’s customized approach to working with clients identifies the types and levels of coverage in alignment with your unique needs and your budget.
For more information, call RPM agency to find out when the next Cyber Educational Seminar or Webinar is taking place. 720-683-0010.
In addition to cyber insurance, RPM can help you make the best choices when it comes to your Business Owner Policy, Workers Compensation, Employee Practice Liability and Commercial Auto coverages. Learn more at www.rpmagency.com.