Cyber insurance – what your small business needs to know

Skye Theodorou

7th Oct 2022

As Cyber Security Awareness Month looms this October, the risk of cyber incidents impacting any individual or small-business owner has never been greater. The Small Business Cyber Security Best Practice Guide published by the Australian Small Business and Family Enterprise Ombudsman found that small business is the target of 43 per cent of all cybercrime in Australia.

Shockingly, it is here to stay. Cybercrime costs are expected to increase by 15 per cent per year up until 2025, reaching an eye-watering $10.5 trillion annually, according to Cybersecurity Ventures. This is big business for criminals, and is expected to outstrip the global trade of all major illegal drugs combined. Small businesses are prime targets for cybercriminals, whether through social media hacking, invoice fraud or email phishing attacks. We all know someone or have experienced an attempted scam.

Here are four things to consider when thinking about cyber insurance:

1. Where do you start?

Did a client, customer or stakeholder require you to take out cyber insurance? Is there a specific limit you need to take out? Consider whether you are exposed to cyber risks – including things like social media hacking and cyber extortion – and if you need it, or if there is a specific event you want to make sure you and your business is protected from. If you’re considering getting cyber insurance or just want a quote you can go online, or contact your local insurance broker.

2. What does it cover?

Cyber cover can vary from company to company, so be sure to look into the inclusions of your policy before making a purchase. Cyber insurance for SMEs can be narrow in cover or broad. It can cover data breaches, security failures, ransomware attacks, extortion, social media hacking, cyber theft, phishing, telephone hacking, and social engineering fraud.

3. Can you afford it?

Now, it is all well and good to say you’d like to insure everything and that you’d like the most comprehensive cover or biggest limit of insurance available, however, it should match the risk faced by your business, and the ability and willingness of you to afford the cost. The cost of cyber insurance is growing dramatically in countries such as the UK and USA, all as a result of significant claims events – in the USA alone the average cost of a cyber incident is more than a million dollars.

It can be helpful to chat with an insurance expert to ensure you’re getting the right amount of cover for exacting what you need to avoid paying too much.

4. Keep in mind some steps to protect your business from cyber events

Whether you have cyber insurance or not, educating yourself or your team on cyber risks is important. Password protect your devices and logins and use multi-factor authentication where possible. Update all software, and back up your data at least weekly. These are all steps you can take today to help protect your business from cybercrime.

This Cyber Security Awareness Month, we’re encouraging all small-business owners and sole traders to look into the best ways to cover themselves and their businesses from cyber security breaches. Taking proactive steps early on can help protect you in the long run.

This article was first published on our sister website Inside Small Bussiness.