Cybersecurity is one of the greatest risks facing today’s businesses. Just consider that 43% of all cyberattacks target small businesses, and the average attack costs $200,000. More than half of small businesses experienced a breach in 2018, and 60% went out of business within 6 months. Cyberattacks can bring down any organization, which is why cyber liability insurance exists. It’s quickly becoming a standard part of an institutional insurance portfolio. In this piece, you’ll learn why.
What Is a Data Breach?
In the strictest sense, a data breach is any kind of attack that exposes sensitive data. For example, hackers can gain access to a company’s IT infrastructure and steal the names, addresses, and social security numbers of your customers. As an asset, data is both highly valuable and highly sensitive, making it very vulnerable to digital attacks in many forms.
In a broader sense, a data breach is a term used to describe all kinds of cyberattacks that target businesses. That includes malware attacks that disable important pieces of IT, or ransomware attacks that force companies to pay a ransom to restore the status quo. Stealing data isn’t always the motive, but causing chaos and extorting funds almost certainly is. Given the sheer number of threats businesses face, many are turning to cyber liability insurance to help manage the potential liability.
How Should Your Business Handle a Data Breach?
That all depends on the type of business and the nature of the breach. However, there are a few steps every business should take following an attack:
- Act Fast – The longer you wait to act – diagnosing the attacks, stopping the damage, and informing the victims – the worse the damage becomes. With cyberattacks, it’s often tempting to try and ignore the problem or minimize the consequences. The better approach is always to act swiftly with every resource available.
- Enlist Experts – Most companies, small or large, lack the in-house resources to adequately address a cyberattack. They need specialized technical experts to fix the damage, as well as lawyers who can help them address liabilities and possibly even PR teams to help rehabilitate the company image. If your business needs help recovering, seek it out ASAP.
- Think Strategically – It is easy to make the mistake of panicking and acting irrationally in the wake of an attack. The choices you make now could have serious consequences later, so try to keep a cool head and think strategically through the issue. Your immediate concern is mitigating the cyberattacks, but your broader concerns are keeping the business running and getting back to full strength immediately. That helps explain why so many decision-makers have sought out data breach coverage – it keeps disasters from destroying the business.
Why Does Your Business Need Cyber Liability Insurance?
The average cyberattack is already expensive, and some cost exponentially more than average. Just one strand of malware netted hackers over $10 billion from multiple companies. And in the most expensive single attack in history, the email communications firm Epsilon lost over $630 million after hackers stole customer data. The total cost of cyberattacks can quickly skyrocket when you factor in all the attendant costs. Those include the inability to conduct business, loss of customers, theft of data or intellectual property, or the cost of investing in recovery and stronger security. Add to that the cost of lawsuits, which can rise into the tens of millions depending on the breach affected.
For companies caught off guard, cyberattacks can have crippling financial consequences. That’s where cyber liability insurance comes in. Like all insurance policies, this one pays you when your business suffers through a covered incident, which in this case is a cyberattack. Those funds may not make up for all the damage, but they could be the difference between a business that survives and one that closes.
What Does Cyber Liability Insurance Cover?
That all depends on the details of the policy. Some cover you in the event of a certain kind of attack – malware, ransomware, phishing attack, etc. Others will step in to cover a specific part of the recovery effort – tech fixes, legal fees, lost revenue, etc. As the policyholder, it’s your responsibility to find a policy that covers you against the most likely attacks facing your business. You also need to identify the most costly consequences and find a policy that protects you financially. A company like Viking Bond Service can help you find a policy suited to your specific needs and wants.
How Can Your Business Obtain Cyber Liability Coverage?
First, you need to find a company that offers a suitable policy. Even though data breach coverage is becoming more common, it’s still not offered everywhere. The company you get business liability insurance from, for instance, may not be able to offer you data breach coverage as well. Once you find a suitable provider, you will apply for a policy by submitting information about your business, your cybersecurity measures, and your credit history. Underwriters will use that information to evaluate your risk exposure and then quote you a premium price. The coverage becomes active after paying the premium.
How Can Your Business Prevent a Data Breach?
Unfortunately, no business can prevent a data breach. The world’s largest companies and most powerful governments have all been victims of cyberattacks. Determined hackers can bypass almost any security measures, and the vast majority of companies lack the resources to invest in perfect cybersecurity. As the stats in the intro illustrate, most companies get attacked, many fail to stop the attack, and an alarming number of businesses fail as a result. Based on the data and the anecdotal evidence over the last few decades, companies can only conclude that no one is immune to cyberattacks. Instead, they should do everything possible to defend themselves, yet operate as if a successful attack is imminent. In that context, the best way to protect your business from a data breach is to have an insurance policy.
Viking Bond Service – Coverage for the 21st Century
For something as important as cyber liability insurance, you want to work with a provider committed to protecting you and your business. Rely on Viking Bond Service to make the process easy from the first interaction onward. Our team can help you evaluate your risks, explore coverage options, find something that fits your budget, and guide you through the application process. We strive to be the partner you need to ensure you continue thriving into the future.
If you’re actively looking for a policy, complete our online application at any time. If you would like more information first, please contact us at your convenience. To learn more about our company and what we do, explore our enlightening resource all about surety bonds.