Technology in the 21st century has opened up many possibilities for greater speed, efficiency, production as well as streamlining processes for businesses. However, the rapid transition into the digital world, has heightened the risk of cyber breach.
Traditional insurance policies originate from a time when the biggest risk to a business was the loss of or damage to physical assets. These industrial age policies were not designed to respond to the threats of the digital age.
A ransomware attack is where a criminal encrypts the data of a computer system so that it cannot be used, and requests payment in return for reactivation. These attacks are costing Australian businesses millions of dollars each year and SME’s are particularly vulnerable to them.
Lost or stolen customer data and corporate intellectual property also poses a severe threat to SMEs. They could be forced to pay an expensive ransom fee or be faced with costly remediation to fix damage to their computer systems. A good incident prevention and/or response team can help mitigate this growing threat.
Andrew Taylor, Forefront/NFP & Cyber Product Head, A&NZ for Chubb says “Business continuity plans must address the intangible threats of the digital age. With business so reliant on technology, a simple outage from a cloud provider or a malware infection can be extremely harmful to any kind of business.Employees are often the weak link in a company’s cyber defences. It is surprising how often people will open unsolicited emails or visit unauthorised sites on a work computer.”
— Chubb NA (@ChubbNA) June 27, 2016
A cyber insurance policy will help cover the increasingly valuable non-physical assets, and respond specifically to new online risks. To help businesses navigate cyber attacks, good insurance policies can also provide true 24/7 incident response assistance and access to expert vendors.
Taylor says with bigger organisations getting more savvy about cyber threats, are small and medium businesses even more at risk.
“for the simple reason that large businesses have more resources to deploy against cyber threats, such that cyber criminals see smaller businesses as soft targets. The data of an SME is often less protected than that of a large business – but equally valuable to cyber criminals.”
“It is interesting to note that smaller businesses can expose their larger trading partners to cyber-attack. Hackers know that SME’s may have ‘trusted access’ to the online systems of large companies, so they will pursue these businesses and use them as an access point to the bigger prize. With attacks of this nature, in addition to covering the cost of rectifying the cyber breach within their own system, an SME may also be exposed to liability claims from their trading partners.”
Cyber risks are on the increase and SME being at threat is an opportunity for brokers to advise their clients on the importance of being insured against digital criminals.