Why you need Cyber Insurance in 2022
As inflation rises, businesses must always look for ways to save money. Such a way is to address the cyber security risks you face. Cyber Essentials is a proven way to reduce this risk.
In 2021 there were more than 1,200 publicly disclosed data breaches. On average, organisations were spending an average of £3 million in response to such incidents. However, this doesn’t apply to smaller and micro businesses. The damage to smaller companies are normally fatal and often result in the business failing. Therefore, effective risk management is a must.
One of the most common ways to mitigate the risk of a cyber security incident is cyber insurance. Such policies provide organisations with the means to implement incident response measures. This can be forensic investigation, legal assistance and/or public relations support.
Suitable Cover?
Standard business insurance will not cover such items. Most only cover costs related to technical issues. These might be issues such as corrupted hard drives and lost devices. Subsequently, your cover might be insufficient.
There are no doubts as to the value of cyber insurance. The UK Government’s Cyber Security Breaches Survey 2022 found that only 43% of businesses have a cyber insurance policy. However, most businesses were not included in the survey, as it did not address many of the UK’s micro businesses (0-9 employees). Therefore, the situation is far worse than the Government believes it is.
If you do not have a policy, you are missing out on countless advantages. Your business will be exposed to serious damage, which must also be considered in the event of a breach.
The Financial Consequences of a Breach
Data breaches are huge for a business. It begins with the immediate shockwave when an incident occurs. This means disruption to business processes and the need to adopt emergency response measures.
The problems will continue and your reputation will need repairing. This might include setting up helplines for affected individuals. Maybe you have to offer complimentary credit monitoring services. There will be a cost to this. Does your insurance policy cover this?
Even when you take these steps, you will lose customers. We have always preached that losing your clients’ data will result in the losses of some of your clients. This is because your clients lose trust in your ability to protect their sensitive information.
It’s not over…
However, your problems are not over. The regulator will know of your breach and will investigate. This in itself will be a resource drain for you. The ICO enjoys publicity, so your reputation might suffer again, however.
The threat of fines and enforcement action is real. The GDPR (General Data Protection Regulation) and its UK equivalent, supervisory authorities have the power to impose penalties of up to €20 million (about £17 million) or 4% of the organisation’s annual global turnover.
Most organisations won’t receive a fine. If they do, it shouldn’t be fatal. However, a comparatively lenient penalty can cause major problems. This could mean job losses.
Even if the regulator doesn’t issue a fine, it might issue an enforcement order. This could require the organisation to invest in its security defences. This might mean enrolling staff on awareness training programmes. However, all of these requirements have an associated cost.
We strongly recommend you investigate cyber insurance. We won’t try to sell you a policy. It is not our policy to recommend a provider. What we can do is help you ensure the policy covers your needs. We can help you with protecting your business. We strongly recommend Cyber Essentials. This will decrease your risk and protect your business.
Protect Yourself
Initiatives like Cyber Essentials can help you protect your business. GDPR compliance will help you protect the personal data you process. Therefore, why not book a free call with us to chat about your needs. There is no obligation and we will even provide you a report without charge. If you choose to call us, have your insurance documents to hand. We will let you know how well covered you are. Or perhaps not…