Starting a small business often comes with a significant financial commitment for owners. With their fiscal futures on the line, small business owners will want to make sure they are protected from all types of threats. One of the fastest emerging risks small businesses in the United States are facing is cybercrime. In fact, a recent study conducted by the Ponemon Institute found one-third of all U.S. small businesses were a victim of a cyberattack in 2012.
With small business owners having a higher level of financial exposure than those of larger organizations, purchasing a cyber insurance policy, with data breach coverage, is essential. Before using Bolt Insurance to help compare policies from different insurers, it is important to become knowledgeable about all the aspects of cybercrime.
What exactly is cybercrime?
As the Internet increased in popularity, and small businesses began incorporating web-based technologies, a new liability risk emerged – cybercrime.
Cybercrime comes in many shapes and sizes, including:
- Phishing – Using fraudulent emails to trick the recipient. It is typically used to obtain money, but criminals can also use it to gain access to a company network.
- Hacking – Hackers infiltrate company networks to gain access to sensitive information. The result of this type of cybercrime is usually a data breach.
- Mobile malware – Criminals attempt to infect smartphones and tablets with damaging software to gain access to information or prevent a device from working.
How much do cyberattacks cost small businesses?
No matter what type of cybercrime a small business faces, they will have many costs, such as repairing their reputation, recovering lost information and defending against potential lawsuits.
- The Ponemon Institute surveyed 56 organizations and found the average annualized cost of cybercrime was $8.9 million per year in 2012, ranging from $1.4 million to $46 million.
- In 2011, the average annualized cost was $8.4 million, showing that the cost of this type of crime is certainly on the rise.
With the cost of a cyberattack potentially costing a small business millions of dollars, it is important to have the proper protections in place. Cyber insurance, with data breach protections, can help cover the costs of a lawsuit, such as court and legal fees, so a single incident doesn’t result in financial losses that force a business to close its doors for good.
How frequent do cyberattacks impact small businesses?
As small businesses begin to increasingly adopt web-based technologies, cyberattacks are occurring more frequently. Business improvements, such as cloud computing and big data, can lead to better efficiency, but it also creates a greater risk of a cyberattack.
- The Hartford Steam Boiler Inspection and Insurance Company found 55 percent of small businesses in the U.S. have had a data breach, and 53 percent reported multiple incidents.
With the frequency of these attacks increasing, it has never been more important that small business owners purchase cyber insurance, with data breach protection, so they aren’t forced to pay the costs out-of-pocket.
What are the top trends in cybercrime?
With small businesses becoming better at defending against cyberattacks, criminals are conducting more sophisticated attacks to get around the defenses.
Here are some of the top cybercrime trends for 2013:
1. BYOD – According to ThreatMetrix, cybercriminals have been increasingly targeting mobile devices in response to the “bring your own device,” or BYOD, trend that has more employees using personal smartphones and tablets for work purposes. As we become a more mobile society, smartphones and tablets will be essential in the workplace, so companies can’t simply eliminate these devices. Instead, the necessary steps to protect them need to be put in place, and insurance needs to be purchased to protect against lawsuits stemming from inevitable attacks.
2. Cloud – Another major trend in cybercrime is cloud computing. Many small businesses use this technology for data storage and to host applications. ThreatMetrix said the cloud is much easier to access than behind-the-firewall systems because an off-site provider hosts it, so businesses using this technology could see heightened risk of an attack.
Another popular use for cloud computing is for email. Should company emails be compromised, sensitive information could get into the wrong hands. If this data belongs to a customer, a hefty lawsuit could be a result.
How can you prevent cyberattacks?
With cyber criminals seemingly targeting small businesses more often, owners of these companies need to know the steps they can take to defend against these attacks.
- Tip No. 1 – Create strong passwords – Oftentimes, data breaches are the result of poor passwords. That being said, small business owners need to be sure all devices have strong passwords. It is recommended that these shouldn’t be simple to guess, such as birthdays or anniversaries. Passwords should include lowercase and capital letters, numbers and symbols. This method is one of the best to prevent breaches from occurring due to the loss of personal mobile devices that have been used for work purposes.
- Tip No. 2 – Limit who has access to sensitive information – Data breaches can also occur when too many people have access to sensitive company information. To prevent such instances from happening, small business owners should restrict who has access to important information to a limited number of people. No employee should be able to access information they don’t need to complete their jobs, as this is how data breach incidents occur.
- Tip No. 3 – Restrict access to public Wi-Fi – With more employees using personal devices in the workplace, these people should be informed not to use public Wi-Fi on their smartphones or tablets. This increases the chances of cybercriminals gaining access to company networks. Any network that is unknown or not password protected should be avoided at all costs. Additionally, while working at home, employees should be required to have a password on their wireless networks if accessing company networks and servers.
Purchasing cyber insurance with data breach protection is a smart move for all small business owners
No matter how many steps small business owners take to prevent cybercrime, there is always the chance one might occur. With that in mind, purchasing cyber insurance with data breach protection should be a priority for all small businesses.
Cyber insurance provides small business owners with coverage for lawsuit damages, lawsuit defense costs, breach notice costs, data restoration costs and breach extortion costs. Without this type of coverage, small business owners would find themselves extremely exposed, as a cyberattack could lead to significant financial implications.
What small business owners need to do to prevent cybercrime from affecting them
With nearly all small businesses having some sort of online presence, cyberattacks have become a major worry for owners of these types of companies.
Small business owners have a significant amount of financial exposure, much greater than those who own and operate large corporations, and all it takes is a single incident to force them to close their doors for good. With that in mind, it is important for small business owners to sit down and examine their cyber risks to determine if cyber insurance is a policy that should be included in their insurance portfolios.