Why Should a Business Consider Cyber Insurance?

It has become commonplace to read about cyber security breaches in the news. This week the Australian NDIS health data breach has been all over the news. So it is not surprising that cyber insurance has now become a frequently discussed topic. It is a well-known fact that cybercrime is on the rise, with criminals becoming increasingly brazen in their attacks.

It has become commonplace to read about cybersecurity breaches in the news. This week, the Australian NDIS health data breach has been all over the news. So it is not surprising that cyber insurance has now become a frequently discussed topic. It is a well known fact that cyber crime is on the rise, with criminals becoming increasingly brazen in their attacks.

For example, the world recently watched on in shock as a large part of the USA was not able to obtain fuel because cyber hackers penetrated a utility company’s IT system and shut it down.

Locally here in Australia, hackers recently shut down the back end of the Nine Network, which is a business that owns radio stations, a TV network, and newspapers.

Obviously, attacks such as these mean small businesses in Australia can longer ignore cyber threats. Currently, the three largest cyber exposures are business email compromise, ransomware and human error.

In reaction to the intensified awareness, the Australian Governments has become increasingly active in trying to reduce cybercrime. The federal government has done this by introducing regulations to protect personal data. Government has also looking at legislation to make it mandatory for companies to disclose if they have paid money as a response to a ransomware attack.

How to Reduce Exposure to Business Cyber Attacks

To reduce cyber risk, businesses should take a proactive approach:

Daily Data Backups: Ensure data is backed up daily and test recoverability regularly to avoid paying a ransom.
Updated Antivirus Software: Automatic updates are critical for defending against evolving threats.
IT Support and Training: Investing in IT systems and providing staff training on cybersecurity best practices can significantly reduce vulnerabilities.

Cyber Insurance for Small Business

It can be challenging for a small business to know how to identify their cyber risks when they are focusing on their day-to-day operations. It is important for smaller businesses to consult with their managed IT services provider or consultant. It is important to act on their recommendations and adequately invest in your IT systems and controls.

That said, all the systems and controls in the world can not guarantee that a cyber attack will not occur. This is why you need cyber liability insurance. Cyber Insurance plays a critical role in protecting a business and allows it to transfer losses arising from a cyber incident to the insurer.

In simple terms, there are three main cyber risks an SME business can manage through insurance.

Losses to your business

The first risk is losses to your business, for example loss of profits, business impact costs, and preventative shutdown costs.

Loss to other

Insurance can cover the cost of:

- third party litigation from affected clients;

- Regulatory investigations (notifiable data breaches)

- Fines and penalties

Cyber event response costs

- IT forensics

- Virus extraction

- Customer notification costs

- Public relations costs

It’s important to realise insurance is effectively the last line of defence. Taking a proactive approach to your business’ cyber exposure is critical. The right IT support and staff training will play an important role in reducing the chances of an attack.

With cyber threats on the rise, now is the time to review your cybersecurity measures and ensure your business is prepared for potential attacks. Contact FD Beck Insurance Brokers to discuss how a tailored cyber insurance policy can protect your business while helping you understand how to get the most out of business insurance.

If you have any questions, please speak to FD Beck Insurance Brokers. We can help with arranging a cyber insurance policy that is suitable for your business.