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Why Cyber Security Insurance May Be Necessary For Small Businesses

He who does not prevent a crime when he can, encourages it. — Seneca

Cyber security is regularly in the news. Attackers have historically hunted big game like Yahoo! and Ashley Madison.

That’s what makes headlines.

Forbes recently revealed new findings about how hackers have changed tactics, though and are being indiscriminate in their intentions just to infiltrate the ground floor of a supply chain. Small businesses, like yours and mine, might be in an attacker’s sights. This is a solid reason to transfer cyber risk through insurance. It may mean purchasing a standalone cyber liability policy or amending your company’s existing policy to include cyber coverage.

The top motivation behind cyber crime is money. Stealing credit information is the digital equivalent of robbing a bank and the hackers can be anyone – employees, competitors, or some anonymous jerk who’s content to make a living as a thief and extortionist.

Malware is the weapon of choice lately, typically from outsiders. Ransomware is a popular type of malware that holds the company’s data, including its clients’ personally identifiable information, for ransom until you pay into an untraceable account like Bitcoin. It can be caused by an accidental opening of an email or a concentrated effort by someone outside or even inside an organization.

Discuss with your IT department or specialist – if you have one – about a contingency plan should you experience major business interruption, network outage or data loss. If you are a single-member company, then consider hiring an outside vendor and develop a risk assessment plan.

Cyber protection is money well-spent because your finances and reputation are at stake and I believe those are often connected. For example, once Yahoo! announced it was hacked, Verizon lowered its acquisition bid by $350 million, and that’s also when the media pounced on the once-leading digital-company for not being cyber-savvy.

Assess whether your organization’s cyber liability coverage is included in other purchased insurance policies. It may also be worthwhile to extend your organization’s cyber insurance policy to cover data stored in cloud servers.

I’ve advised all sizes of small businesses – from the 30-person emerging company to the one-person entity operating via a phone and laptop. If hackers are being indiscriminate in their targets, then I’m issuing an equally indiscriminate warning to small businesses: Invest in a cyber liability policy. Your business and your clients’ information are worth protecting.

Contact Brinen & Associates to discuss cyber risk strategies and how to add cyber liability to your company’s insurance policy.

 

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