If your business was targeted by a successful cyberattack, do you have a plan for recovery? Would you be able to recover? Cybersecurity insurance helps companies protect their brand against the financial and reputation losses that are associated with successful data breaches, ransomware, malware, phishing, and other types of cyberattacks.
And this type of insurance isn’t just for the big brands. Small and medium-sized businesses can be targeted by these threats. In fact, small businesses are 350% more likely to receive threats compared to their larger counterparts! With the average cost of a data breach reaching $3.31 million for small businesses, many can’t recover.
These three cybersecurity insurance questions and their answers can help you understand why you’re overdue for an IT security audit and determine if you need insurance, what can happen if you go without, and what insurance policies often require in order to be compliant.
1. Who Should Get Cybersecurity Insurance?
If your business deals with any sort of sensitive data, cybersecurity insurance is a must-have. This can include customer data, personal information, contact information, financial records, medical details, Social Security numbers, and more. Some SMBs that can benefit from cybersecurity insurance include (but are not limited to):
- Healthcare organizations
- Architectural firms
- Engineering companies
- Manufacturing organizations
- Marketing teams
- Real estate agencies
2. What Can Happen If You Forgo Insurance?
As with going without car or home insurance, going without cybersecurity insurance can be costly. However, data breaches tend to be much more expensive compared to insurance claims for homes and vehicles! Many businesses simply can’t recover from a data breach due to the damage and must shut their doors for good. Data security is a must-have, but nothing is foolproof.
Going without cybersecurity insurance can lead to:
Depending on your industry, you could face a number of high expenses and fees for going without cybersecurity insurance. Breached businesses can be on the hook for:
- Investigation costs
- Data recovery costs
- System recovery costs
In addition, companies without backups or disaster recovery plans could also be required to pay a ransom in order to get back into their network and data. And government regulations require customers to be notified in the event of a breach. As a result, these organizations will have to pay notification fees and costs to get the word out to their clients.
Damage to Reputation
And with those notifications comes damage to a brand’s reputation. Customers may lose faith in the company’s security and head to the competition. This could absolutely devastate an organization’s bottom line and it may be impossible to recover from the reputational damage.
With fleeing customers and new clients hesitant to trust your company, you could see a significant drop in revenue. For companies that are locked out of their network and data as a result of the breach, they could also see lost revenue from the downtime. And until the network is restored or the ransom is paid, they will not be able to recover profits. How much would this downtime cost your business?
3. What Are the Cyber Insurance Requirements?
Having a cybersecurity insurance policy alone isn’t enough to protect your business. Companies need to be compliant with their policy to ensure they are covered if they are ever affected by a breach. In order to obtain and maintain a policy, businesses often have to meet certain cybersecurity requirements, such as:
- Undergo regular cybersecurity training
- Implement anti-virus software
- Maintain central patch management
- Use a firewall
- Regularly back up data and network
- Undergo vulnerability scanning and/or penetration tests
- Use advanced endpoint protection tools (EDR)
- Utilize intrusion detection
- Actively manage permissions
- Implement multifactor authentication
- Aggregate logs and receive alerts for anomalous events that could be an indicator of compromise
- Employ a 24/7 Security Operations team (or MDR service)
Depending on the industry, companies may also be subjected to other compliance requirements, such as audits and official certifications like the NIST or CMMC compliance.
Cyber insurance isn’t just for the big names within your industry. Everyone, small or large, can benefit from a policy as any business can be the target of a cyberattack. However, a policy alone won’t be enough to protect your bottom line. Audits need to be conducted and IT security solutions must be in place if you want the policy to pay out if your business falls victim to hackers.
VersaTrust can help your organization position itself to meet cybersecurity liability insurance requirements and maintain your policy. With a thorough IT security audit, you can get your network prepared for the worst.