Cybercriminals no longer limit their attacks to multinational corporations and other large organizations, as small businesses are more vulnerable targets
Key takeaways:
- Small businesses are targets of cybercrime. In fact, their employees encounter 350% more fraudulent social engineering messages than workers at large corporations.
- Each successful cyberattack could cost a small business between $25,000 and $50,000.
- A small business could struggle to recover financially from a cyberattack.
- Cyber insurance provides the protection these smaller companies need when facing an attack, and it generally comes in two forms of coverage: first-party and liability.
When you think of cybercrime, you probably envision a hacker infiltrating the database of a bank, credit card company, or large retailer and stealing information or extorting money. But while massive corporations remain a target, cybercriminals are becoming more opportunistic and attacking smaller institutions, too.
In fact, an employee at a small business with fewer than 100 people receives about 350% more social engineering attacks per year than a worker at a large corporation.
In addition, the average cyberattack on a company with fewer than 250 employees costs the organization over $25,000, according to one key study. Separate numbers published in Security magazine estimate the impact per incident at between $36,000 and $50,000. In either case, these are significant amounts for small businesses.
Insurance is available, however, and could be the one chance a struggling firm has to survive an attack. Here’s a look at why small business cyber insurance is essential for companies in 2022.
Common cyberattack threats
Before investing in cyber insurance, it’s valuable to learn how your company could become a victim. After all, cybercrime is a broad term that includes multiple methods of separating targets from their money or data.
About 49% of all attacks directed toward small businesses with fewer than 100 employees are phishing schemes. These attacks involve sending emails that impersonate a well-known brand to trick the recipient into clicking a malicious link. From there, the attacker can collect log-in information and even gain access to the company’s accounts.
In addition, 40% of attacks involve scamming, including false lottery-win notifications, unclaimed package emails, and fake business proposals. Much like a phishing attack, these scam emails aim to get the reader to click on a link or download an infected file onto the company’s computer.
Cybercriminals are also using more advanced techniques than ever before, including multiple redirects, shortening URLs, and hosting information on document-sharing sites, all of which helps them avoid anti-phishing and anti-virus technology.
Small businesses should be aware of these risks and educate their employees about the dangers as much as possible.
Many small businesses can’t afford the recovery costs
Of course, like other forms of crime against a business, cybercrime brings financial losses. As mentioned, many organizations can’t afford average losses of $25,000 to $50,000. And about 88% of small business leaders feel their organizations are vulnerable to a cyberattack. Unfortunately, many don’t have the resources to afford professional security staff.
In addition, many owners don’t have the time to learn the ins and outs of cybersecurity themselves. And even if they did, most wouldn’t know where to begin.
Cybercriminals know that most smaller companies don’t have the resources to protect themselves as well and see them as easy targets. Hackers can often spot these organizations’ vulnerabilities and exploit them quickly before a firm even knows they’re a victim.
Who needs cyber insurance?
Do you still have questions about how vulnerable you are to a cyberattack? Your company’s business practices can provide some valuable insight.
For instance, any organization that stores data like phone, social security, or credit card numbers via on-site computers or online networks could be a prime target. Hackers are also after any personal customer data they can get their hands on, as they don’t necessarily need financial information to make a profit.
Customers can sue after a criminal steals this information, making cyber insurance necessary for any organization collecting customer data.
Insurance is also required if you have a large customer base. And even some small businesses have large ones, particularly in the retail industry.
Regulatory fines or other penalties could hurt your bottom line if there’s a data breach, and most states legally obligate businesses to notify customers of a break-in within a specific period. An insurance policy can cover some of these expenses, reducing overall losses.
In short, investing in cyber insurance is a good idea if your business stores any customer information — because lawsuits, fines, and remediation costs could quickly sink a company without it.
Insurance options for your small business
You’ll likely encounter two options while researching cyber insurance policies: first-party and liability.
First-party insurance provides monetary assistance to help with recovery costs. These expenses could include an investigation of the incident, lost revenue from a business interruption, ransomware payments, and a risk assessment to prevent future attacks. Some first-party plans also cover the expense of notifying customers of a data breach and providing them with services like credit monitoring after an attack.
Liability coverage protects when customers or third parties sue you following an attack. It can also cover regulatory fines, court judgments, settlements, and attorney fees.
The insurance you require depends on your company’s budget and unique needs, and speaking with an insurance agent will provide insight before you pay for anything.
Speak with a cyber insurance expert today
The concept of cyber insurance is relatively new, as online crime has only become an issue over the past couple of decades. However, cybercrime cost American businesses $2.7 billion in 2020 alone, and small businesses are no longer immune because they have valuable information and fewer resources to prevent an attack.
Smaller organizations can take steps to protect themselves, though, by implementing more robust security measures and investing in small business cyber insurance. These plans consider your unique circumstances, potentially keeping your company afloat if cybercriminals victimize it.
NICRIS Insurance offers customized personal, life, and commercial insurance policies. All you have to do is tell us a bit about you and your needs, and we can develop a free cyber insurance quote for your company. Contact us to learn more or fill out a quote request today.