Does it surprise anyone that cyber security is such a hot topic in our digital world?
The Internet of Things (IoT) describes the network of physical objects (things) that are embedded with sensors, software, and other technologies for the purpose of connecting and exchanging data with other devices and systems over the internet. According to the company Statista, there are approximately 15.14 billion connected IoT devices as of 2023, which is equivalent to just under twice the total world’s population (eight billion).
In 2023, it’s hard to find a single business that operates without any connection to the internet. Customer demand for convenience through technology will only continue to escalate the cyber exposures facing a business trying to maintain or grow market share. Cyber threats change at a rapid pace, which adds to the complexity and compounding nature of cyber security. How will future generations of artificial intelligence (AI) compound cyber threats? Finding a trusted IT Security partner who can keep pace with evolving risks should be a priority initiative for every business.
How have large corporations responded to the growing cyber risk?
The modern corporate executive has cyber security very high on their list of greatest business threats. And that makes sense given the ever-increasing reliance on technology and internet-based systems, for businesses of all sizes. Cyber Security is no longer considered solely the responsibility of the IT department, but rather an issue for the entire C-Suite at large corporations.
Do small to medium-sized businesses take cyber risk as seriously as large corporations?
Several recent studies have shown that despite significant cyber security exposures, up to 85% of small business owners believe their company is safe from hackers, viruses, malware, or data breaches. This disconnect is largely due to the widespread, albeit mistaken, belief that small businesses are unlikely targets for cyber-attacks. In reality, data thieves are simply looking for the path of least resistance. Studies have found that nearly half of attacks are against organizations with fewer than 250 employees. Most U.S. small businesses:
- Lack a formal internet security policy for employees.
- Have failed to have their data backed up in more than one location.
- Do not have an outside party test their computer systems to ensure they are well-protected against hackers.
- And have declined the opportunity to transfer cyber risk by purchasing Cyber Insurance solutions.
Nobody can get past my firewall. Besides, that’s why I pay for an IT Security Provider!
While it is wise to use the services of an IT Security company to strengthen your protection against cyber criminals, your business has a huge blind spot if that is your entire plan. Many business owners and insurance decision-makers incorrectly believe that any cyber liability is transferred to their IT provider. And even the best IT Security company cannot guarantee you avoid a cyber breach or attack. In fact, human error can be your greatest vulnerability when it comes to cyber security. Statistics show:
- 29% of small businesses have experienced at least one data breach.
- Only 20% of data breaches are caused by lost or stolen devices and only 11% are caused by hacking.
- 68% of data breaches are caused by employee or contractor mistakes (clicking bad links, weak passwords, etc.).
What are businesses legally responsible for if their data is breached?
Laws vary by state, but all 50 states, the District of Columbia, Guam, Puerto Rico, and the Virgin Islands have security breach notification laws that require businesses or governments to notify consumers or citizens if their personal information is breached. There are also requirements of how quickly you must notify customers to avoid additional regulatory fines and penalties.
What is the typical cost of a cyber-attack?
The Ponemon Institute in Michigan is considered the pre-eminent research center dedicated to privacy, data protection and information security policy. According to their recent study, the average annual cost of cyber-attacks for small and medium-sized businesses is over $2 million. Most small businesses cannot absorb that kind of loss, and as a result, nearly 60% of small businesses victimized by a cyber-attack close permanently within six months of the attack. Many of these businesses put off making necessary improvements to their cyber security until it was too late because they feared the costs would be prohibitive.
I thought cyber insurance was only important for medical and financial sectors.
Any business who collects and stores medical or financial data is at a high risk. However, your business needs cyber insurance if you:
- Accept credit cards or other digital payment types.
- Store confidential customer information.
- Use computers and mobile devices like tablets and smartphones.
How can cyber insurance protect my business? Isn’t that why I have a General Liability policy?
Most traditional commercial general liability (CGL) policies will not cover losses due to a cyber event. Luckily, cyber coverage can fill that void. As insurance carriers have become more comfortable with cyber exposures, they have also continued to expand the coverage and limits they will provide. Cyber insurance can cover:
Our insurance specialists at Swarts, Manning & Associates can ready your business to survive all types of potential risks, including cyber security. We will work with you and go over all your coverage options to find what suits your needs. Give us a call to get started: (702) 878-2820.
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Each month, Swarts, Manning & Associates covers relevant topics for your business. Stay tuned to hear more discussions about managing your insurance and industry-specific tips.
