Your business needs cyber security insurance, here’s why

Last year, South Africa had the third highest number of cybercrime victims in the world resulting in losses of R2.2 billion. In a world of data breaches and hacks, cyber security is important for everyone with an online presence, more so for businesses with the responsibility to protect customers. The question is, who protects the businesses? This is why cybercrime insurance is a vital part of making any business future fit.

Philippa from Santam says, “With the world changing in the way it is, it is important that companies stay ready for what lies ahead. One great advantage of having cyber insurance is that it enables a business to bounce back from any business interruptions and financial loss incurred as a result of cybercrime. Cyber insurance also helps with the practical side of getting IT experts to restore systems, recreate data and pre-empt new threats.”

Who should be concerned about cybercrime?
In today’s digital world, all organisations, big or small, including SMEs, are at risk of a cyberattack. The advancement of technology and remote work has left many people vulnerable to crimes like hacking, data theft and damage, and even industrial espionage. In short, everyone must be concerned about cybercrime. These are some of the most affected industries:

• Small businesses: By virtue of the fact that they simply do not have enough resources to invest in adequate security measures, small businesses are at greater risk of phishing and malware attacks.
• Healthcare sector: Since the COVID-19 pandemic began, this industry has seen a spike in denial of service and ransomware attacks. These can be especially costly as businesses in this industry are often extorted for large ransoms in order to resume their life saving services.
• Financial institutions: Thanks to the proliferation of mobile banking apps, financial institutions are at greater risk of cybercrime such as server attacks and data theft where hackers use malicious code to infiltrate servers and steal financial information and money.
• Online education: Thanks to the increased use of various technologies, this sector is experiencing spikes in spam and phishing attacks.

The implications and risks of not having cyber insurance
The average small business hack attack can cost your company anywhere between R50 000 to R250 000 and will require you to manage POPI regulations, keep employees updated on proper digital hygiene and constantly back up your data. Furthermore, if your business possesses or has experienced any of the following, you are at risk of cyberattacks and need cyber insurance:

• Your business stores credit-card data: You could be exposed to security breaches in terms of your customers’ confidential information, running the risk of liabilities occurring from breach of their privacy.
• Your business stores or processes sensitive third-party data: You could have contractual liability if third-party data is leaked, in addition to harming the brand’s reputation.
• Your business uses a transactional and interactive website/e-commerce platform: This means you could face regulatory penalties if a breach were to occur.
• Your business uses a cloud service provider to store sensitive information: You could be held accountable for any information lost during a breach of the system.

The beauty of having cybercrime insurance:
Peace of mind. Ultimately there is no price one can put on that. As a business moves more towards e-commerce and an even greater online presence, it becomes increasingly important and more prudent to be protected from cyber criminals.

Cyberattacks without insurance can result in:

• Liability for accidental loss of data.
• Liability for loss of data and its consequences by deliberate, dishonest, negligent, and fraudulent means.
• Accidental damage caused by computer-driven property or equipment.
• Loss or damage caused by failures or computer malfunction.
• Loss, damage, and liability caused by algorithmic errors and malfunction.
• Loss of intellectual property, reputation, and business opportunities.

Knowledge is power when it comes to matters of cyber security. Equip yourself as a business and protect and empower your people with the peace of mind that comes from cyber insurance.