In today’s digital business world, “security” doesn’t just mean protecting one’s physical store and inventory. The ominously fast-growing category of cyber-crime presents business owners with an equal – if not greater – risk.
According to a 2018 study by Travelers Risk Index, 1 in 5 businesses had suffered from a data breach or cyber-attack. To make matters worse, the damages from these attacks cost small businesses more than $180,000 on average. And it’s not just tech companies who are getting hurt. Restaurants, bars, and any commercial businesses with an internet connection, private data, or the ability to process payments are targets for online thieves.
Unfortunately, only 50% of businesses currently have cyber insurance. Here are a few of the reasons business why owners shouldn’t consider this coverage category to be optional.
Cyber risks are complex
Cyber security is far from simple. It covers everything from system glitches to security breaches to unauthorized access to financial accounts, which are the three most prominent issues currently. However, as technology rapidly changes, so do the inherent business risks. System hacking and cyber extortion are emerging as the next wave of cyber dangers for small business people to manage.
Employees present risk
The majority of data breaches for small businesses are caused by employees. Despite efforts to encourage the use of strong passwords and safe information best practices, it’s virtually impossible to guarantee 100 percent accuracy in any human activity. One employee mistake can quickly lead to a vast, costly data breach.
"According to UPS Capital, 60% of small businesses went under within 6 months of an attack. "
Data breaches can be deadly for businesses
Make no mistake: a data breach can put you out of business. According to UPS Capital, 60% of small businesses went under within 6 months of an attack. Expenses related to data breaches – including legal fees, IT services, and customer notifications – can quickly add up and become insurmountable mountains of debt for a small business.
At Badger Mutual, we recognize that the costliest from cyber-attacks is to a brand. That’s why we offer BrandGuardTM as a part of our cyber insurance. BrandGuardTM covers losses that result from negative publicity and notifications that follow a data security incident, providing your business the time and financial freedom to focus efforts on regaining the trust of the most important asset: your customers.
Government regulations on the rise
In an effort to protect consumers, state and national governments have turned their attention to cyber security legislation. Currently, all 50 states require some sort of notice in the case of a data breach to all affected individuals and law enforcement. According to HSB Insurance, nearly half of these states require entities that collect or store Personally Identifying Information (PII) to have at least “reasonable security.” And this is just the start. As cyber terrorists and risks continue to evolve, legislation will become even more complex. Commercial cyber insurance will reduce the business risk if a data breach were to result in a government investigation.
The bottom line is that it’s important to have a plan. The Federal Communications Commission offers a handy Cyberplanner to help small businesses build a cyber security strategy. While building your strategy, contact your local Badger agent to review your current Cyber Liability coverage and make sure you’re protected.