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One question that often arises when I talk with small businesses: "Do we need cyber insurance?"
Simply put, cyber insurance, or cyber liability insurance, protects organizations from the financial costs of data breaches, ransomware attacks, business email compromise scams, and other cybersecurity incidents. After all, the cost of a cyberattack can be extremely expensive, even for small businesses. According to Microsoft, cyberattacks cost small businesses $255K on average. $255K!
Naturally, most small businesses couldn't handle such a costly attack. Which is why cyber insurance exists in the first place.
So, let's explore two pressing questions:
We've even prepared a quiz to estimate your chances of qualifying for insurance, should you need to.
There's no one right answer here.
Understand, cyber insurance is all about risk mitigation. In fact, virtually all insurance is about risk mitigation.
Ask yourself, why do I have, say, homeowners insurance? Is it because the insurance will prevent fires, tornadoes, etc.? Of course not.
Rather, homeowners insurance simply ensures that if something unthinkable does happen to your home, you're not crushed under the weight of a gargantuan financial loss. Because of the homeowners insurance, you and your family are in a much better position — financially speaking — to pick up the pieces and successfully start over following a disaster.
But notice:
The good news, if you have homeowners insurance, is that you can better afford this damage and difficulty.
The insurance didn't prevent the damage, nor will it prevent the difficulty.
Instead, it'll simply help you come back from the fallout.
And that's simply what I mean by risk mitigation.
You're sitting here prior to any theoretical disaster that might destroy your home. And, so, you do the math:
"Financially, could our family bounce back fast if a fire were to destroy our home?"
Most of us would say "no" — and so we reduce the risk by purchasing homeowner's insurance.
Risk. Mitigated. Plus, we just purchased peace of mind, didn't we?
And cyber insurance works according to a similar "psychology" of risk mitigation and peace of mind.
Cyber insurance will neither prevent the damage of a cyber attack:
Nor will cyber insurance entirely prevent the difficulty of coming back from a cyberattack:
Rather, cyber insurance simply ensures your business is in a better position to handle the financial costs of the damage and difficulty — if you become the unfortunate victim of a costly cyber incident.
Which leads to an enormously important question:
How much would a data breach, ransomware attack, business email compromise scam, etc. cost your business?
Some businesses in Arkansas, even really small businesses, would say — "wow, it could cost me everything!"
"If someone stole all my customer data, or completely locked me out of my system..."
"If one of my employees paid a fake $300K invoice..."
"It would completely shut down my business for good."
And businesses in this category often find they need the risk mitigation — and peace of mind — of cyber insurance. It should be noted: high-quality cyber insurance may provide more than money, too. For instance, your plan may provide legal assistance.
Other businesses, especially small businesses, look at their business and don't see this same level of liability, exposure.
And while there is always something to lose from a cyberattack (always!), businesses like these — having done "the math," hopefully — don't see the cost of a cyberattack justifying the cost of the cyber insurance. And that's a decision I can get behind — as long as this business has performed a truly objective and comprehensive assessment of what they'd lose in the event of a cyber incident.
Do you need cyber insurance?
It boils down to: What would you lose, and how much would that cost you, if cybercriminals hacked your business?
First let me say: Even if you decide your business doesn't need cyber insurance, whether you could qualify for it remains an important question for at least two reasons:
As with most other forms of insurance, insurers ain't going to insure high risks.
They're going to tip those actuarial tables in their favor. It's what they do.
And so before your business can be covered by a cyber insurance carrier, they're going to make sure you have certain safeguards and procedures in place. If you don't, they won't insure you.
Indeed, even more than regulations like HIPPA, most IT and cybersecurity compliance right now is being driven by cyber insurance requirements. That's a fancy way of saying: cyber insurance is a major motivating factor in why today's businesses implement cybersecurity measures in the first place.
But before we consider whether your business would qualify, two quick points:
So, what are the cybersecurity protections and procedures you'll need to prove in order to qualify for cyber insurance?
Many of these are fundamental — safeguards you've likely already heard of. Question is: have you implemented them yet? Too many small businesses across Arkansas simply...haven't.
Instead of considering these requirements one by one, let's spice it up with an interactive quiz...
See how you do...
First, an important note: This quiz is intended to provide a general estimate of your organization's cyber insurance readiness based on common underwriting criteria and our experience helping businesses strengthen their cybersecurity program. It is designed to offer directional insight — not a guarantee of eligibility. Ultimately, each cyber insurance carrier evaluates risk according to its own underwriting standards and risk tolerance.
That being said, take the quiz. Then click the button to see your results.
Regardless of how you did, you just took an important step forward for your business and its security. From cybersecurity to cyber insurance, protecting your business starts with awareness.
If you ever have questions about cybersecurity or your cyber insurance readiness...
...we're standing by — as your hometown IT provider — to answer them.
Just click below to get in touch.