What Are Cyber Risk and Cyber Insurance?
- Read original article here
Andrew Flueckiger
July 26, 2022
Cyberattacks have become more sophisticated and more common in all businesses in the United States in recent years, and cybercriminals have shown that no business is too large or too small to be attacked. In fact, small businesses are targeted more frequently than large businesses because cybercriminals know that they often lack the appropriate cyber protection strategies and cyber insurance that larger companies have.
You can protect your business by understanding what cyber risks are and how you can go about dealing with them. And having the right type of cyber insurance in place, in case your business is attacked, can make the difference for maintaining your business’s hard earned reputation and keeping your doors open. Talk with your local independent insurance agent today to find the appropriate cyber insurance and cyber security risk management program.
What Is Cyber Risk?
Cyber risk pertains to all of the dangers that businesses face in the cyber realm, which is basically anything on the computer or Internet. The repercussions of these potential claims could be enormous, especially if your business deals with your clients’ personal information, such as banking information or personal data.
Some of the dangers posed by cyber risk include:
Ransomware. Perhaps one of the more notorious cybercrimes, ransomware is a specific type of malware (malicious software) that can take over your system and prevent access until a ransom is paid.
Malware. There are many types of malware out there, but they are usually what’s known as a computer virus. Malware can get into one computer or computer network and shut it down, potentially erasing all of the data on the network.
Phishing attacks. These include suspicious emails that will try to gain your credit card or banking information. Phishing attacks typically pose as a trustworthy source and try to trick you into revealing sensitive information.
Hacking. Hackers can find a way into your computer or network, and either insert malware from the inside or steal sensitive information, whether it’s trade secrets, operating procedures, clients’ information, or financial information.
Data theft. Cyber criminals can find numerous ways to steal your company’s and clients’ data, including through hacking your system or through ransomware. Cyber data theft is one of the most common cybercrimes.
Cryptojacking. The rise in value of cryptocurrency has resulted in a type of malware attack that causes the infected system to start crypto-mining, which usually results in the infected system trying to steal various forms of cryptocurrency.
Denial of service attack. This type of attack essentially overloads a computer network’s system with information, causing it to go down. This can often happen with websites, where the website’s bandwidth can’t handle the attack and shuts down.
How to Reduce Cyber Risk
There are many steps businesses can take to reduce cyber risk, but prevention strategies should also be coupled with a proper cyber insurance program that can help get your business back up and running if you do experience a cyberattack.
Train your staff. Educate yourself and any employees about the dangers of cyberattacks. Your employees should be aware of phishing attacks and potentially dangerous emails from unknown sources. Being proactively aware of how cyberattacks occur and the best practices to mitigate them can greatly reduce your business’s risk.
Update your computers. While it can sometimes be a pain to download security patches and computer updates all the time, this is a small step that can be effective in preventing a cyberattack, because your computers will have the very latest in security technology.
Frequently change passwords. Changing passwords can be even more annoying than downloading updates, especially when you have seemingly thousands of different passwords that you have to remember. But routinely changing your passwords can greatly reduce the risk that your system or account will be hacked.
Use two-factor authorization. Two-factor authorization typically requires both a password and a PIN to log in and can be an effective way of preventing hackers from getting into your system.
Back up your data. You could store data backups on a separate, local server or a USB drive, or even use data backup on a cloud server, or with paper copies of critical documents. Having something in place will help your business get back on track if your system does get hacked.
Use a virtual private network. Setting up your network on a VPN with firewalls makes it much more secure and difficult to hack into.
Encrypt your data. You don’t have to be an IT expert to invest in software that can encrypt your data for you. Doing so won’t affect your access to the data but will make it much more difficult for hackers to steal it.
Don’t store clients’ personal information. If your business uses clients’ personal information, such as Social Security numbers, bank account information or credit card information, never keep these on file. It’s okay to ask your customers for their information each time you need it, especially if you explain that it’s for security purposes.
It’s also important to remember that cyber risk affects all businesses, no matter what size they are. Small businesses may feel immune to cyberattacks, but the reality is that they can and do happen to even the smallest businesses, which are potentially at an even greater risk if they don't have cyber insurance to insulate them.
What Is a Cyber Risk Assessment?
A cyber risk assessment is an in-depth analysis of a business’s current cyber security state. This includes its strengths, weakness, and an overall evaluation of what type of data the business has and what risks the business faces in the cyber realm.
A cyber risk assessment doesn't have to be formal, it could be performed internally by people who understand the business’s computer systems, operating procedures, and data risks. If your business has an internal IT department or person, they could perform the assessment.
If you have a larger business or don’t have the know-how to conduct a cyber risk assessment internally, you could pay a third party to perform one for you. There are many reputable cyber security firms that can conduct a cyber risk assessment for you, at a price.
The point is simply to evaluate and understand where your business is with regard to cyber security. Once you have an honest assessment, you can begin to take steps to lower your cyber risk.
What Is Cyber Risk Management?
Once you’ve analyzed your cyber security situation by completing a cyber risk assessment, you can make informed decisions about how best to manage that risk. Your cyber risk management strategy is likely to include common best practices for how to reduce cyber risk and any critical areas that you found in your assessment.
Risk management, whether it’s with cyber security or any other facet of your business, doesn’t have to be as difficult as it sounds. It’s simply having a strategy in place for minimizing the chances of something bad happening. Your cyber risk management plan doesn’t have to be a 100-page document, though it easily could be.
It’s simply a matter of identifying your risks or exposures and the steps your business should take to minimize the chances of anything bad happening.
Nobody will be grading your cyber risk management paper, so it can be as informal as you like. The point of having some type of cyber risk management plan in place is simply to protect your business and your livelihood.
What Is Cyber Liability Insurance?
If your business does experience a cyberattack, having a comprehensive cyber liability insurance program in place can help lessen its impact. Overall, cyber liability insurance has been beefed up in recent years and is more comprehensive than it used to be.
But each insurance company has different coverage options in their cyber insurance plan, and often with very different coverage amounts, so you’ll want to read the actual policy and know what your limits are before deciding on a cyber insurance plan.
Most cyber insurance programs include at least the following coverages, with different liability limit options:
Data breach liability. If your systems are hacked and your customers’ personal information or data is compromised and they sue, you’ll have coverage for those settlements and lawsuits.
Notifying the public. If your business has been exposed to a cyber threat, you’re required to notify the public and all of your customers. If you have a lot of customers, the cost of doing this will be covered.
Lawsuits and legal fees. As with any liability insurance, cyber insurance will also pay for the legal costs of defending your business.
Systems recovery. Some cyber policies will pay for the cost of recovering your data and replacing unusable computer equipment.
Regulatory fines. If your business is found to have breached any regulations and is fined, your cyber policy will typically pay for this.
Ensuring that your business is adequately protected with cyber insurance is a critical step, but one that you can defer to a trusted independent insurance agent. Your local TrustedChoice independent insurance agent can help educate you about the risks posed by cyberattacks and can find you the right type of cyber insurance policy to help protect your business.
