Businesses must not neglect cyber insurance. Source: Shutterstock

Businesses must not neglect cyber insurance. Source: Shutterstock

Saving for rainy days: Cyber insurance is a must for all businesses

THERE IS no doubt that many businesses have benefited from transforming digitally. Technologies such as edge computing and machine learning help optimize costs and maximize profits like never before.

However, great things often come with great risks, and going digital is no exception.

Take cloud computing for example. It involves massive amounts of sensitive data being uploaded via the internet. In the event of a cyberattack, that data is likely to be exposed.

The reality is that as technology becomes sophisticated, so do the threats that businesses face. Therefore, cyber insurance is a must for organizations to protect business assets against increasingly sophisticated cyberattacks.

Cyber insurance does not offer direct protection against cyberattacks. Instead, it minimizes the impact of a breach by offsetting the costs incurred from a cybercrime, helping businesses maintain financial stability.

Cyberattacks are costly and can often bankrupt organizations.

Cyber insurance helps recruit data recovery teams to recover compromised data at short notice, deploy credit monitoring for customers, and engage legal services to manage potential lawsuits.

Therefore, cyber insurance can almost always assure the survival of a company when disaster strikes.

This holds especially true for SMEs, as they do not possess a comfortable financial buffer like big their biggest competitors.

When evaluating the idea of investing in cyber insurance, it is important to note that there is no one-size-fits-all approach to policies.

SMEs and business owners need to think about the type of data they collect and its sensitivity (customer’s bank details are move sensitive than their last names) and estimate the expenses that need to be covered in case an incident occurs.

Also, when considering insurance policies, organizations should do a thorough review of the policies they’re interested in.

Too often the complicated jargon-filled insurance contracts create misunderstandings that could cost a lot of money in the event of an incident.

Preferably, organizations should opt for insurance providers that have a proven track record of sitting through the whole process of processing claims and paying out.

Therefore, companies must not neglect sourcing for a mature security program.  If a breach occurred due to company negligence, insurance will not be able to cover costs, and the company will be solely liable for it.

As mentioned, technology will only get more sophisticated with time. An architecture of high complexity will provide hackers with the perfect environment to ‘attack’ data. Cyber insurance is, therefore, a must.

Simply having insurance isn’t enough. Companies must take measures to protect the integrity of their data, like investing in better security software and implementing solutions that can combat attack vectors effectively.

These investments will eventually pay off as customer trust and retention will greatly increase when tangible efforts on the company’s part to protect data is noticed — which it will be.