How does Cyber Crime affect Small Businesses?
Recent research commissioned by the UK government shows that 90% of large organisations suffered a cyber breach in the last year (up from 81% the year before). But it’s not only larger businesses that should be wary of cyber crime in the UK. The same survey also saw 74% of small businesses suffer a security breach in the same year (up from 60% in 2014’s survey conducted by the UK government).
The same research estimates that the average cost for large businesses to recover from the cyber security breach is somewhere between £1,460,000 to £3,140,000. For small businesses, the average is between £75,000 and £311,000. A costly sum no matter how big you are. The higher end for each average has approximately doubled since a year ago.
Online Crime Statistics from 2014
Number of incidents relating to online crime in 2014, by type:
- Computer Virus: 211,000
- Hacking: 29,000
- Theft of Money (Online): 10,000
- Website Vandalism: 7,000
- Phishing: 5,000
- Theft of Information (Online): 2,000
Number of incidents relating to online crime in 2014, by sector:
- Total number of Online Crime Incidents: 264,000
- Wholesale and Retail: 136,000
- Manufacturing: 78,000
- Accommodation and Food: 19,000
- Transportation and Storage: 19,000
- Arts, Entertainment and Recreation: 12,000
- Agriculture, Forestry and Fishing: N/A
“No two businesses are the same when it comes to cyber risks, therefore it is key to understand the cyber risks your business faces and to ensure your cyber policy is tailored to mirror those risks.”
– Erica Constance, divisional director, FINEX Global.
What is Cyber Insurance?
As more and more small businesses are depending on technology to operate their business, companies need to ensure that they are just as modern-thinking in their security as they are in the modern ways in which they conduct business. With internet-based businesses comes internet-based risks. Too focused on traditional threats like burglary, you may have CCTV pointed at your shop front set to record 24/7, but no computer security system or online security policy in place to protect your data or e-commerce website. As threats change, companies need to protect their business as a whole. Not just their physical assets but their digital ones too.
Cyber attacks are one of the fastest growing crimes against businesses and, whether you rely on your website to generate sales, store sensitive information on the office computers or host important data in the cloud, small businesses shouldn’t assume that cyber crime won’t affect them.
Many small businesses think that, just because they’re not an “online business” or run an e-commerce website, they are safe. But how much do you rely on your computers or the internet to work? What would happen to your business if all your data were to suddenly disappear into thin air? Malware can affect anyone, regardless of whether you’re a business or an individual browsing the internet at home.
Purchasing Cyber Liability Insurance will usually cover you for expense of lost revenue, investigation and reputation management. While an investigation of a cyber crime is ongoing and vulnerabilities are being fixed, your business will be interrupted during the downtime causing a loss of revenue. Not to mention the cost of the fixes.
If made public, the biggest damage of them all could be to your company’s reputation. You may have to offer special promotions or freebies to your customers to regain their loyalty. You may not be able to immediately buy back your customers’ trust, but you can give them incentive to stay until the dust settles and they feel more at ease.
Cyber Liability Insurance, like Professional Indemnity Insurance, can also cover you for any breach of the Data Protection Act. For example, if sensitive customer data gets accidentally leaked or you lose customers’ data due to data breach or virus transmission. Cyber insurance can cover both your business’ own assets (like your company data, software, electronic equipment, etc) and the assets of others (for instance, your customers’ data).
An increasing concern in recent years is hackers holding your website random by carrying out DDoS attacks to take your website offline until you have given into their payment demands. The best option available to you at the time may be just to pay the sum of money, so that customers are able to access the website and business can carry on as usual. A lengthy website downtime might mean that not only do you experience a substantial loss in sales or enquiries, but your customers or following may experience decreased confidence in your brand or service. And you might end up having to pay the hackers anyway if the issue doesn’t get resolved some other way!
Cyber Liability Insurance has been available to businesses for around ten years. Approximately a third of businesses believe that their current insurance policies would cover them in the event of an information security breach, with only a corresponding minority stating that they had purchased Cyber Insurance specifically. Of those that claim to not have coverage, 19% were not even aware of the existence of Cyber Liability Insurance.
But now you are, do you consider it an immediate priority for your small business?