According to the Communications Authority of Kenya (CAK) Q4’2023 Cybersecurity Report, over 1.2 billion cyber threat events occurred between October and December last year, marking a 943.0 percent jump from the 123 million recorded during Q3’2023. Amid these alarming statistics and frequent headlines of major cyber-attacks, it’s clear that small businesses are now prime targets for cybercriminals.
This is largely due to their often unsophisticated cybersecurity measures, making them easy targets. With over eight million advisories issued to critical infrastructure actors, the importance of robust protection is evident. Thus, cyber insurance becomes crucial for small businesses in today’s digital world, especially as reliance on digital infrastructure grows and the need for comprehensive coverage becomes more apparent than ever before.
Cyber Insurance is designed to cover certain financial losses your business incurs as a result of a cyber-incident. While it is more important for companies with digital presences, any business with computers connected to the Internet is vulnerable to cyber risks such as malware, denial of service attacks, and data breaches. For example, you might have a website where clients can make purchases or where you store client data. Such a digital presence carries the risk of being targeted by cybercriminals, and cyber insurance is designed to help protect against the repercussions of falling victim to cybercrime. A cyber incident can take many forms, such as malware, business email compromise, and phishing, leading to identity theft, financial theft, and privacy breaches.
Although the importance of cyber insurance has become more prominent, small business owners still do not take cyber risks seriously. The consequences of cybercrime can be just as severe as, if not more than, an event such as theft or fire. If you use the internet to perform your service or as part of your overall business operation, then suffering a cyber-incident could have significant financial and reputational implications for your business. Even with top-notch security technology in place, hackers are becoming more sophisticated every day in their efforts to bypass security infrastructure, so the likelihood of suffering a cyber-incident is ever-present. While antivirus and other security tech are important to have in place, they are not the silver bullet.
A claim under cyber insurance may cover a number of costs, liabilities, and losses associated with the cyber incident in question. If you suffer an attack, it’s likely you and your business will incur costs as a result of the event. For example, costs to obtain advice and support, identify the source and scope of the attack, restore your systems, recover your data, and notify victims of privacy breaches. All of these are known as ‘first-party losses’ and include costs to get your business back up and running. Cyber insurance may also cover third-party liability costs if your business experiences a cyber-attack that causes financial loss to third parties such as clients or suppliers. Following a cyber-attack, it can be tricky to work out what your next steps should be to minimize damage, so another important feature under Cyber Insurance is access to an incident response specialist who can help coordinate the steps your business needs to take to recover from the cyber incident.
Just like any other insurance policy, the cost of cyber insurance depends on a number of factors such as the size of your business, revenue, employees, and the industry you operate in. When calculating your premium for Cyber Insurance, additional factors considered include potential downtime following an attack, types of data stored, likelihood of human error, and reliance on automation, systems, or data.
Cyber insurance is just one piece of the puzzle when it comes to mitigating cyber risk. Despite taking every preventative step, businesses can still suffer cyber-attacks, and this is where Cyber Insurance plays an important role. A cyber-attack can be costly, and cyber insurance mitigates risk by helping to pay the cost for your business to recover from an attack. When considering Cyber Insurance options, it’s important to carefully review the potential cyber risks that your business faces, along with the potential loss you could suffer following a cyber-attack, when deciding which cover option to select.
