24th October 2022
What Potential Risks Can You Face By Not Having Cyber Insurance?

What Potential Risks Can You Face By Not Having Cyber Insurance?

Cyber insurance is a type of commercial insurance policy that protects your business from any damage it incurs online, as well as covering the cost of any legal actions following an incident. In an increasingly risky digital environment, cyber insurance safeguards your business, your employees, and your customers against the financial and reputational damage arising from cybercrime.

Why Do I Need Cyber Security Insurance?

UK businesses in all sectors are becoming more reliant on Internet-based technologies to conduct their business and deliver services. Cloud-based subscription software platforms, data storage solutions, and collaboration interfaces - from WhatsApp to Microsoft Teams, are increasing the dependence of small businesses on connected devices and applications.

With this interconnectivity comes a heightened risk to your business's data security - not just for large and established businesses and banks, but also for small businesses. Many hackers deliberately target small and mid-size companies due to their assumed lack of cyber security knowledge; some attacks, for example, are designed to steal tiny amounts from businesses in micro-transactions that may not be noticed for many weeks or even months.

Opportunistic crime can easily slip past the basic security safeguards of most SMEs, giving access to sensitive personal and financial data which can be used for fraud and identity theft. Websites can even be hijacked to host inappropriate and illegal material, and stolen data is regularly sold by auction on the so-called 'dark web'.

The financial and reputational risks to your business are substantial, and without cyber insurance the damage can have a lasting effect on your business.

Financial Risks

The primary motivation of cyber criminals is to steal or extort money. For this reason, hacking software, or malware, is frequently designed to deceptively acquire user passwords by posing as a legitimate password request by a trusted organisation - phishing emails and texts are a prime example of this. In this way, a criminal could break into a company website, Dropbox account, or email server and steal financial information, or directly hack a company PayPal account to siphon money into a third-party bank account.

Other hacking attempts use 'code breaking' algorithms to guess a user's password, using a combination of publicly available data from social media (e.g. anniversary dates, children's names, mother's maiden name) and random word and number combinations, often with a shocking level of success at cracking low security passwords. Still more attacks use ransomware to shut users out of their computer operating systems until they pay a 'ransom' to restore access, usually in a crypto currency.

Risks To Your Customers

Another way for cybercriminals to make money is to steal sensitive or personal data for use in fraudulent transactions.

Your own business may not be directly affected by a successful breach; instead, the damage may fall on your customers. If customer data stored under your responsibility is misappropriated, lost, or stolen by hackers, your business could face a large fine from the Information Commissioner's Office (ICO) under the 2018 Data Protection Act (which incorporates the strict data security requirements of the EU General Data Protection Regulation, or GDPR).

Reputational Risks

Beyond the inconvenience, embarrassment, and financial cost of hackers stealing customer data is the reputational damage incurred. Such a breach will fatally undermine the contract of trust between your business and its customers and, in an economy in which data is widely stored online, could even lead you going out of business completely. Most customers are unlikely to entrust their sensitive and financial data to a business with a known history of cyber security breaches.

How To Obtain Cyber Insurance

Falling victim to a cyber-attack that results in the loss of funds or data will often leave business owners struggling to pay for damages. Cyber insurance will help cover your financial losses and those of your customers in the event of a successful breach, giving customers an extra level of assurance when doing business with you, and helping you get back on your feet if the worst happens.

ManningUK can provide expert advice on the level of cyber insurance cover you need and can tailor a package to suit your requirements. To discuss your requirements or request a quote, please call 01491 578759 today.

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