Why SMEs are interested in cyber liability insurance

Here’s the hard truth: Cyber crime isn’t going away. As long as businesses and individuals continue to use technology and the internet to conduct business, make payments, and store valuable data, cyber attacks will remain an ongoing—and serious—problem.

Cyber attacks are on the rise.

According to the Australian Securities and Investment Commission’s 2015 report Cyber Resilience: Health Check, recent years have seen “significant growth in the number and severity of cyber attacks around the world.” Sadly, local businesses—SMEs [small-to-medium sized enterprises] in particular—have not been spared, and the report identifies cyber attacks as a major risk for Australian businesses.

In an interview with Computer Weekly, Gartner’s Anne Robins warns that after the United States, Australia is the second most commonly attacked country for ransomware. She adds that SMEs are more likely to be hit than larger organisations. In the same article, Charles Lim of Frost & Sullivan says, “An estimated 50-60% of the globally generated attacks [using] ransomware were detected in Australia.”

It’s no wonder, then, that worries around data security are plaguing SME business owners all around the country.

SMEs are more vulnerable than their larger business counterparts

The Australian government has demonstrated serious commitment to improving the cyber resilience of the country’s businesses, reportedly allocating $230 million to its cyber security strategy in 2016. However, commentators have criticised the plan for overlooking SMEs. This news.com.au article quotes David De Laine of Check Point Software Technologies as saying, “This is a step in the right direction and we would like to see more support for small business – the business engine of the country.”

SMEs are investigating the value of specialised cyber liability insurance

As ASIC’s report points out, “[cyber] risks are recognised as being increasingly diverse and sometimes unforeseeable – placing a greater emphasis on responding to risks and managing their effects, not just trying to prevent or avoid them.” Because the most sophisticated cyber attacks can be difficult to predict or prevent, more Australian SMEs are considering purchasing specialised cyber liability insurance alongside their existing commercial insurance policies.

Cyber liability insurance covers a range of first- and third-party risks relating to a loss of data or a network security breach. First-party risks include damages to your own business, such as a breach of company data, the resultant business downtime, damage to your professional reputation, costs incurred due to cyber extortion, and so on. Third-party risks include damages resulting from a breach of your customers’ private information and data.

Proactively ensuring data security is more essential now than ever before

Whether or not your business is covered by cyber liability insurance, the old adage of prevention being better than cure holds true. If you’re not sure whether your data security is up to scratch, it’s a good idea to book an ‘IT health check’. The aim of an IT health check is to assess your company’s cyber resilience, diagnose potential weaknesses, and offer advice and insights into how you can jack up your data security systems. Take advantage of PowerNET’s commitment-free IT Health Check.