Do you have a website? Networked computers connected to the internet? Do you store private client information? If the answer to any of these questions is yes, then you need cyber liability insurance.
Young companies and startups may think that they are immune to cyber risk and are tempted to opt-out of the coverage to save on premium. Startups actually have the most to gain from proper cyber liability coverage. The harm to reputation from having client data compromised can be fatal if not managed properly. Further, startups and other small businesses may be considered soft targets and at greater risk than larger corporations.
Here are five potential cyber risks facing businesses now
Ransomware
This is where a piece of malicious software, generally received via a phishing email, encrypts all of the data on the company’s network, then the perpetrators request a ransom in order to provide the decryption key. In a report by Coalition, a cyber insurance provider, ransomware losses cost an average of US $263,000 in 2023.
Example:
In 2023, five Ontario hospitals were affected as cybercriminals launched an attack that led to a system outage involving patient records, email and more. The ransom was not paid but restoring systems took a long time and hospitals provided credit monitoring services, helpline and many other forms of communications with victims.
Hack Attack
This is when a hacker manages to gain access to a company’s network. Hackers often accomplish this by exploiting an unpatched vulnerability within the software which allows access to company data. The target is your customers’ personal information, especially credit card information.
Example:
NASA was once hacked by a 16 year-old named Jonathan James where documents stolen were valued at around $1.7 million. The incident forced NASA to shut down its computer systems for three weeks and cost them about $41,000 to fix.
Denial of Service Attack
This type of attack is becoming increasingly cheap and easy to carry out. A denial of service attack is done simply by overwhelming a company’s website through pushing a large volume of data to its servers in a malicious manner.
Example:
One known example is the wave of attacks that targeted Yahoo and Amazon in 2000, which was estimated to have a cost over $1.2 billion in damages.
Human Error
Humans can often be the weakest link in your company’s cyber risk management. A vast number of data breaches are the result of information being lost, or distributed to the wrong person. Even the seemingly mundane such as a typo in an email address, can have far reaching consequences, particularly where sensitive personal information is involved.
Example:
According to Cyber Savvy Canada’s Research 2023, 75% of surveyed employees at small and medium-sized businesses reported at least one behavior that could potentially compromise their employer’s cyber security or data.
Fraud
This is where a criminal poses as a senior person within the firm – either by hacking into, or ‘spoofing’ their email account. Spoofing is when a hacker poses as someone else and ‘tricks’ the user into thinking they are, generally, someone with authority. They then convince a worker with financial authority to make a rush payment. The worker makes the payment and it is an automatic loss.
How small businesses can help reduce their exposure to cyber risks
Use secure passwords
Make passwords stronger by making them longer, using three random words, numbers and symbols, or use a password management software.
Antivirus software
Install antivirus and malware software on all company devices.
Do regular software updates
Software updates contain vital security upgrades which help protect you from the latest malware and hackers.
Education
Educate staff on the dangers of cyber risks, and what to be aware of, particularly where unusual emails or requests are received.
What is cyber liability insurance?
It’s specialized coverage to protect businesses against potential financial losses resulting from cyberattacks, data breaches, and other cyber-related incidents.