Cyber risk insurance
Did you know the average cost of a data breach in 2020 was $2 million? (1)
Remember that data breach is just one of several cyber risks. Ransomware, on average, costs $84,166. (2) Other cyber risks include BYOD policies, insider threats, Distributed Denial of Service (DDoS) attack, and more. Interestingly, with a significant part of the workforce now working remotely, such risks have escalated to newer heights.
Big Names Failing at it
Indeed, the best way to thwart such cyber events is to have multiple layers of security and well-defined cybersecurity policyThe legal document issued to the policyholder that outlines the conditions and terms of the insurance; also called the ‘policy.
But even then, with the sophisticated skills and techniques cyber attackers employ, there’s no way to ensure 100 percent guarantee. Was there a way to ensure that, names like Big Basket, Dunzo and WhitHat Jr – India’s top startups – wouldn’t have fallen victim to cyber-security attacks very recently. (3)
This list of top brands cyber-attacked is long and includes the likes of Adobe, LinkedIn, and Yahoo. (4)
What Losses Does the Company Incur?
In the aftermath of cyberattacks, the company in question has to deal with various types of financial losses… Losses that are not viable to incur for the small and medium-sized businesses. In fact, as a result of a data breach, 60 percent of small companies go out of business within six months. (5)
Code Spaces is a very fine example of this. A renowned source code services provider, in 2014, it saw a DDOS attack, which massively hit its market credibility and financial position. Eventually, it had to shut down due to that attack. (6)
- The first financial loss comes in the form of business interruption. After the cyberattack, the company will take its time to regain its posture and restart its operations. In that period, it will sustain losses.
- Such cyber episodes also result in litigation. For instance, if a company stores customers’ information and in a breach the information gets leaked – those customers can file a lawsuit against that company. And this actually happens! Now, defending self in the court of law costs money; you’ll have to pay to the lawyer, as well as some other legal fees. And if the decision is in the favor of the plaintiff, the company may be asked to pay a sum for damage. This ‘sum’ can be significant depending on the extent and gravity of the breach.
- Not to forget the reputation damage that such cyberattacks bring to the company, which subsequently affect their revenue. This could be quite overwhelming and unmanageable in several cases, inevitably resulting in the shutdown of that company.
There are several other direct and indirect costs that cyberattacks bring for the company. For small and medium-sized businesses, these costs can be too much to incur.
How to Defend Your Company against Cyber Risks?
Of course, the first step is to always ensure such events never take place in the first place. Invest extensively in cybersecurity.
Following, if indeed something goes bad, you must stay financially prepared to handle that. This is where cybersecurity insurance comes into play. Generally put, it a type of business insurance that financially protects the business in events of any cyber-attack or incident. It covers the loss and damage that business suffers as the result of the said event.
If your business has online operations, you should ideally invest in cybersecurity insurance. The coverage amount will depend on your risk exposures, as well as several other factors. For instance, if you’re in finance and collect others’ sensitive details (like their PAN card number, credit cards details), the coverage should be much higher vs. if you run a blog and just ask for visitors’ name and email address.
To learn more about cybersecurity insurance, please go here.
If you need more information or personalized assistance, consult certified insurance brokers. Contact us today and let us help you pick the best cybersecurity insurance plan from a top insurer.
