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What Is Cyber Insurance And Why Do You Need It?

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ust last month, popular social networking service LinkedIn witnessed one of the biggest security breaches of 2021. Information associated with over 700 million LinkedIn users was made available for sale on a dark web forum. The hackers also posted a sample of the data that they had stolen and put up for sale. The sample revealed that although the stolen data does not include login credentials or financial information, it does contain identifiable information such as full names, physical addresses, phone numbers, email addresses, geolocation records, genders, LinkedIn usernames and profile URLs.

This security incident is a fitting example as to why cybersecurity is so important. It demonstrates how a single security breach can have thorough, far-reaching consequences. It also makes you aware that cyber incidents can happen to any company, no matter their size. In today's digitalised world where the majority of business operations require the internet, cybersecurity is something that you cannot afford to ignore.

Stats have always supported the need for strong cybersecurity measures. According to RiskBased Security, data breaches exposed an astonishing 36 billion records in the first half of 2020. Additionally, IBM Security states that the average cost of a data breach is $3.86 million.

Money isn't the only thing that a business stands to lose in the event of a data breach. Money can be earnt again, but trust is something that is hard to restore. A security breach is a dent in the integrity of an enterprise. Some industries such as healthcare, banking, and e-commerce are more vulnerable than others in this respect. This is because they store data that is highly sensitive and can be used to cause significant damage if it falls into the wrong hands.

Biggest Cyber Threats To Businesses

Phishing: Phishing, a type of cyberattack where social engineering techniques are used, is perhaps one of the most common types of cyberattacks in the entire world. As per CSO, phishing attacks make up about 80% of all the reported security incidents. Phishing attacks are so common because humans are incredibly fallible. Cybint report that 95% of cybersecurity breaches happen because of humans. Phishing is very simple in its nature; victims are essentially delivered the malware that they almost willingly (but inadvertently) download onto their systems. Phishing involves a fraudster, posing as a legitimate entity or organisation, luring their targets in with lucrative offers via emails.

As per a report by Small Business Trends, one in every ninety-nine emails is designed to infect computer systems which amount to 4.8 phishing emails per employee in a 5-day workweek. The report further states that over 30% of these phishing emails are able to bypass the default security.

IoT-Based Attacks: The number of internet of things (IoT) devices used by individuals and organisations worldwide continues to skyrocket. According to the (International Data Corporation (IDC), 152,200 IoT devices will be connected every minute by 2025, meaning that nearly 80 billion IoT devices will be in use. The majority of IoT devices are not designed with security as a priority and consequently, most of the data on IoT devices isn't well secured.

Additionally, it's relatively easy to hack IoT devices. According to Netscout, an IoT device can be hacked within 5 minutes. The Covid-19 pandemic significantly increased our dependency on connected devices and as a result, the year 2020 witnessed a 30% rise in IoT malware, as reported by SonicWall.

Distributed Denial-of-Service (DDoS) Attacks: DDoS attacks are another popular type of cyberattack that businesses have to encounter. This attack involves an array of connected online devices that are collectively referred to as a botnet, being used to overwhelm a target network with fake traffic so that intended users are unable to use it. Although DDoS is not an attack on your data, it can still cause a lot of damage as it will make your website and services unavailable to your customers.

What Is Cyber Insurance?

You insure things that are of value to you such as your financial assets, your health, your car, etc. Life is filled with uncertainties and insurances are a way to ensure that you are ready for any kind of challenge that life throws at you. If we are talking about things that have value in today's modern world, we have to include your digital assets as well.

In today's world where hackers continue to get more creative and sophisticated, protection alone is not enough. If you only prepare to prevent a cyberattack, your preparation isn't complete. You also have to take into consideration that no matter how much you prepare there's always a possibility that the cyberattack will be successful. This is where cyber insurance, also known as cyber risk insurance, comes in.

Cyber insurance is a way for businesses to prepare themselves for the devastating effects of a cyberattack. A cyber insurance policy helps businesses mitigate the damage caused by a cyberattack. Most cyber insurance policies cover expenses related to investigation and damage control of the cyberattack. Cyber insurance policies can vary greatly in their nature and offerings as they are usually customised to suit the size and requirements of each enterprise.

Since many policies also offer first-party and third-party coverage it is important to know what these things mean. First-party coverage means out-of-pocket expenses directly caused by a cyber incident. Third-party coverage involves the money that the company has to spend to settle issues that arise from its failure to protect customer data.

Some first-party covers include costs incurred to restore data or damaged software programs, loss of income due to a cyberattack, ransom paid to a hacker, notification costs and crisis management. Some of the third-party covers are the cost of regulatory proceedings, electronic media liability, network security and privacy liability. Some of the things that aren't covered under most cyber insurance policies include war and terrorism, bodily injury, property damage, utility failure and contractual liability.

Why Do You Need Cyber Insurance?

Cyber insurance is an additional step that you can take to ensure cyberattacks don't affect your business. The US National Cyber Security Alliance estimates that 60% of all small businesses shut down within 6 months of a cyberattack. A recent Government Survey also revealed that only 32% of businesses are insured against cyber threats. With dependability on technology and the internet on a meteoric rise, cybersecurity laws around the world getting more stringent, and fines becoming harder to pay, cyber insurance has now become a crucial business feature.

Conclusion

In today's fast-paced world, risks are evolving every minute. Many businesses find themselves confounded at the vast number of threats and digital protection options. Every business is unique and has different requirements. What works for one, might not for another. Also, with the technological landscape evolving and new threats appearing every day, what worked last year, might become outdated by the next. Today, the key to protection is to stay one step ahead and to keep your cybersecurity infrastructure up-to-date and ready for all kinds of emerging cyber threats. If the news headlines have taught us anything it's that complete protection against cyber threats is almost impossible as even the most prominent names in the tech-industry are evidently not immune to cyberattacks. In this view, cyber insurance can work as a lifeline for a business, regardless of its size.

Although cyber insurance is imperative for every business today, just like any other insurance it can be difficult to understand. You might also find yourself unable to decide what kind of cover your business requires. In addition to this, you should always run a track record check on the company that you plan on buying the insurance from, in order to check if they are likely to pay out in the event of a cyberattack.

At Gemraj Technologies Ltd we house experts with industry insights and experience that allows them to develop an infallible cybersecurity roadmap for your business. We offer a diverse range of cybersecurity services including compliance and audit, risk management, identity and access management and security operations centre (SOC) as a service  in order to cover all critical cybersecurity points and provide your business with intelligent, comprehensive, and continuous protection.

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