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 cyberattack.
Unfortunately, cyber breaches can result in financial losses, regulatory fines and reputational damages. While these consequences can significantly impact organizations of any size, small businesses 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 cyberattack, according to cyber economy researcher Cybersecurity Ventures.
Cyber insurance could provide small businesses with a critical lifeline in the event of a cyber event. Cyber insurance can cover the costs related to data recovery, legal defence, customer notification and public relations efforts.
Why Small Businesses Should Consider Cyber Insurance
Although every company should consider the merits of cyber insurance, there are several reasons this coverage is particularly important for small businesses:
- Small businesses are an attractive target for cybercriminals. Many small businesses 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 cyberattacks target small businesses. Threat actors may initially target smaller businesses’ software to gain a foothold into larger businesses through supply chain attacks.
- Small businesses often neglect cybersecurity. Compared to larger organizations, small businesses typically have smaller budgets and limited resources for cybersecurity. Small businesses may also have fewer IT staff and lack the technical expertise to implement and manage effective security measures, leaving them susceptible to cyberattacks.
- Small businesses’ employees may leave them vulnerable to attacks. Many cyberattacks stem from human error, such as employees accidentally opening attachments containing malware. Despite this, only 2 in 5 small businesses have implemented employee cybersecurity training, according to the Business Development Bank of Canada. Poor cybersecurity awareness among staff could inadvertently expose small businesses to cyberthreats.
- Cyberattacks are getting harder to spot. Phishing emails and similar scams are becoming difficult to detect now that artificial intelligence (AI) tools allow cybercriminals to seamlessly mimic a company’s tone, language and style. As such, the number of small businesses falling victim to sophisticated attacks may increase as AI evolves, especially if they lack the expertise to protect against them.
- Cyberattacks may have financial consequences that are too severe to recover from. The lost business, operational disruption and legal consequences of cyberattacks can take small businesses months, or even years, to recover from. Even if small businesses 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 small businesses from the devastating consequences of cyberattacks 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 small businesses, helping to expedite their recovery. Moreover, some policies cover the cost of a consultant to minimize damage to a company’s reputation and brand.
Overall, a robust cyber insurance policy can minimize downtime, restore data, and limit financial and reputational harm. Moreover, cyber insurance highlights an organization’s dedication to safeguarding client data, which stakeholders and customers may favour.
Did you know that 60% of small and medium businesses don’t survive after a cyber attack? Protect your business with Cyber Insurance, call us at 780.424.2727 or click here to get a quote.