Technology is everywhere.
And its use in our day-to-day lives presents both incredible opportunities and significant risks for businesses of all sizes. While enabling us to streamline operations, reach wider audiences, and innovate like never before, technology also exposes us to cyberthreats that can disrupt operations, steal sensitive information, and damage reputations.
Cybercrime effects everyone. Small- and medium-sized businesses (SMBs) are increasingly becoming targets for cybercriminals due to several factors (source: 2023 Verizon Data Breach Investigations Report):
- Ease of Targeting: Cybercriminals often see SMBs as easier targets compared to larger enterprises because of fewer resources dedicated to cybersecurity.
- Value of Data: SMBs may possess valuable data, such as customer information or intellectual property, making them attractive targets for data theft or extortion (think: your local credit union or dentist’s office).
- Connected Infrastructure: As businesses embrace digital technologies and online connectivity, their networks become interconnected with vendors, partners, and clients, creating multiple points of entry for cyberattacks.
What Is Cyber Insurance?
Cyber insurance, also known as cyber risk liability insurance or simply cyber risk insurance, is a specialized type of insurance coverage designed to protect businesses against the financial losses and liabilities associated with cyberattacks.
These attacks may include data breaches, ransomware attacks, business interruptions due to cyber events, and legal expenses that come from regulatory investigations and lawsuits.
Cyber insurance policies typically provide coverage for various aspects of cyber risk management, including:
- legal representation,
- customer notification,
- public relations,
- extortion,
- penalties, and
- data recovery (source).
By transferring some of the financial risks associated with cyber threats to an insurer, businesses can better manage the potential impacts of cyber incidents and recover faster from events.
The coverage differs by company and policy, and often comes with stringent requirements. It’s critical to understand what you’re signing—specifically what you will be responsible for, as failure to adhere to those requirements can result in a claim being denied in the event you do have an incident.
Risk Management
While being covered by a cyber insurance policy can help with peace of mind, you have a role to play, as well.
In addition to your policy, there are important steps you must take to secure your business:
- regular security assessments and audits,
- employee training on cybersecurity awareness, and
- implementation of strong IT security controls (e.g., firewalls, encryption, multifactor authentication, etc.)
Having an incident response plan is also critical. This is a structured set of procedures and protocols that outlines how your business will detect, respond to, and recover from cyberattacks. It helps minimize the impact of cyberthreats and ensures a coordinated and effective response, mitigating damages and restoring normal operations as quickly as possible.
It's important to note that insurers may offer incentives or discounts for businesses that demonstrate proactive risk-mitigation efforts, such as implementing encryption technologies or conducting regular security audits.
Your Cyber Risk Policy and WYRE
No matter which cyber risk policy you choose, you are ultimately responsible for being compliant with the policy requirements.
WYRE always helps.
Tyler York, CEO: “ We implement—by default—tools and security measures that meet or exceed the requirements of cyber risk insurance in most cases. And we’re happy to address specific compliance needs, whether regulatory or insurance-related, on a case-by-case basis.”
We can also help you create, implement, and maintain an incident response plan.
Putting It All Together
Cyber insurance and risk management work together to protect your business against cyberthreats. By integrating cyber insurance into your overall risk-management framework, your business can proactively safeguard its assets, reputation, and longevity.
Whether you’re in Tennessee or anywhere else around the world, we would love to help you navigate the complex waters of cyber insurance and security.