The risk for cyber espionage continues to evolve as perpetrators are targeting small businesses at an alarming rate. Symantec, a bellwether in the web-security space, recently announced that attacks surged almost three-fold for small businesses or those with less than 250 employees. Small businesses now account for more than 31% of all web attacks or greater than 300 million incidents annually. Given this backdrop, should your business consider investing in greater security measures and cyber liability insurance?
Why are small businesses being targeted?
Attackers are recognizing now that it’s more effective to go after the weakest link than to focus on the largest companies in the world. If they can attack a million different websites with ease versus one large website, it’s more strategic for them to go after the small players. The data that these cyber criminals are targeting include bank account information, customer data and intellectual property.
Is your business at risk?
Companies that store financial information without proper encryption are at greatest risk for potential damages. It’s also important for businesses to assess their financial risk should something go wrong with the website. Businesses need to determine the value of the data being stored or transmitted as it relates to the potential risk to losing that data. For instance, if you operate an e-commerce website and store valuable credit card information that is encrypted properly, then you should have some level of cyber liability insurance. A businesses that merely uses their website as a brochure to market their storefront business and/or only accepts payment through a third party such as PayPal, may not need to seek cyber liability insurance.
Be proactive to reduce cyber threats
After establishing the financial risk, the next step is to identify the processes in place to mitigate risk factors. What specific security measures are in place to prevent a third party from hacking the system? Many insurers will require companies seeking cyber liability insurance to provide specific details on controlling third party access. This is why many companies that apply for insurance need to make changes and enhancements to their existing security infrastructure to obtain the desired coverage. That may mean that a company will need to train their employees or hire more personnel to adequately reduce the security risks that pose a threat to their business model.
Consider cyber liability insurance
Cyber liability insurance rates have remained flat, so now is the time to consider purchasing it if your business is at risk. If this is the case, apply for an add-on to an existing general liability policy with your current carrier. The existing relationship may help you achieve a lower premium for the cyber portion.
BIDaWIZ is an online marketplace where small businesses can obtain professional tax, accounting and financial advice and services from a network of over 750 online CPAs, EAs, CFPs & Tax JDs. BIDaWIZ suite of services include the ability to ask professionals finance and tax questions, find an accountant online and work with them, and to subscribe to the premium tax and financial newsletter and knowledge base.