Cyber-attacks continue to rise in both frequency and severity.
Too many small businesses are unprepared for the impact a cyber attack will have on their business.
A recent Cyber Risk Study done by The Hanover found some troubling statistics:
- 38 percent of business owners have increased their cyber liability insurance in the past 12 months.
- 42 percent of businesses do not have enough cyber liability insurance to cover the average cyber attack.
- 60 percent of businesses would become unprofitable within 2 days of losing access to critical systems and data.
This is scary, because it’s real.
Watch the video below or keep reading to learn more…
The High Risk of Cyber Attack
One of the most telling findings from The Hanover report was that one in three small businesses would not know how to respond to a ransomware attack.
Ransomware is when someone came in and took control of your system and basically held it hostage, you could not see your database, you could not process payments, you could not manage any inventory or any sales, if they just locked your system down unless you pay a large sum of money.
One in three companies would not know how to handle that situation.
92% of respondents said that they would be negatively impacted financially.
That’s kind of like duh, of course, you would. If you couldn’t use any of your systems, of course, you’re going to be negatively impacted financially.
This is the one that really scares me, 60 percent of those businesses would be unprofitable in 48 hours.
Now you may be saying, “Ryan, look what happened with COVID. We’re aware of what happens when we can’t use our systems, which is essentially what’s happening for many small businesses because people just aren’t buying things.”
But what if they did start buying things and you couldn’t use your system?
Small Business Cyber Attacks
Hackers right now are just blasting out programs and viruses and little links inside of emails that are camouflaged as your spouse’s name or your brother’s name or your uncle’s name or your boss’s name.
And they do this as a way to get you to click that link. When you click that link, it installs software on your system that locks it down. And if you can’t use your system, you’re in big, big trouble.
On a standard business owner’s policy, you are not going to have enough coverage for that. Now thankfully, many business owners’ policies have started adding an endorsement that provides an introductory level of coverage.
They have all different names, CyberOne, CyberRisk, cyber whatever, that have a small amount of first and third-party coverage on them. Sometimes they have crime coverage as well.
But we’re often talking about $50,000 in coverage. If your entire business is locked down and you cannot operate, you cannot make sales, you cannot service clients and in order to even be able to do those things that you can’t currently do, you had to pay a large sum of money…Would $50,000 get that done?
I just don’t think so.
Especially when the average loss, according to this report, from a cyber attack on a small business is a $1,000,000.
That’s what it takes in terms of lost business, lost customers, lost new business, the actual payment, revamping all the systems, all the software that has to go in to make sure it doesn’t happen again. You’re talking about close to a million dollars in loss if you have a major ransomware attack.
This is happening to small businesses and your standard BOP policy only gives you $50,000. I’m thankful that the business owner’s policies, the standard policy that most small businesses have started to add a small amount of coverage in.
It’s just not enough. That’s the problem.
That’s why you need a stand-alone cyber insurance policy and here’s the kicker, guys they’re not that expensive.
Now, if you have a very large business, you’re handling very sensitive material, HIPPA material, or if you have a lot of social security numbers, then you have a slightly larger risk. But in general, for most businesses, stand-alone cyber liability insurance is not an expensive policy.
And for a relatively small amount of money, you’re getting a $1,000,000 dollars in coverage.
Cyber liability is as necessary for your business today as a general liability policy was a year ago.
At Rogue Risk, we specialize in cyber insurance, work with over 7 of the top cyber liability insurance carriers in the world and can turn a quote around in minutes.
If your current insurance professional has never addressed cyber liability insurance with you before, then I’d encourage you to reach out to us today.
I look forward to introducing you to a new way of viewing your insurance program.