Cyber attacks on small and medium-sized enterprises (SMEs) are on the rise in the UK. Research from Hiscox has revealed that 53% of businesses suffered a cyber attack in 2023, up from 38% in 2022. With the government putting the average cost of a successful cyber attack at £15,300, this is a potentially costly as well as growing problem. While insurance cannot prevent cyber-attacks, cyber insurance can offer you financial support should your business fall victim to an attack.
What is cyber insurance?
Cyber insurance protects businesses financially should they be targeted by hackers or malicious software and suffer damage or data loss from their IT systems and networks. A typical policy can cover incidents such as having system access held for ransom, its system infected with malware, or losing money due to a phishing scam.
What can cyber insurance cover?
Cyber insurance can offer organisations a wide range of protections, including:
- Cyber attack prevention – as the threat has grown and the costs of claims have risen, so some insurers now offer policyholders access to cyber security experts when they take a policy out. These cyber security specialists can undertake system vulnerability assessments and staff training to help prevent a successful attack.
- System restoration – cyber insurance can cover the cost of restoring and securing your systems after a breach.
- Paying ransomware demands – cyber criminals sometimes ransom a business’s systems and data, refusing to allow them access until the ransom is paid. Should this happen, cyber insurance policy may cover the costs of these demands.
- Legal expenses – if an attack leads to a loss of data or if it infects another organisation’s systems, you can be left open to legal action and compensation claims. Cyber insurance can cover the cost of defending the case and any compensation awards that may follow.
- Forensic investigations – these aim to reveal how the attackers got in and what needs to be done to prevent the problem from occurring again.
- Business interruption – should the attack mean you are unable to trade – if, for example, you are locked out of your system – then business interruption insurance can provide you with an income until you can get back to normal. While a typical policy will give you 12 months of cover, many insurance experts now believe that 24 months is a more appropriate period.
- Reputation management – cyber attacks can have wide repercussions and affect customers and suppliers. Effective reputation management can help keep third parties informed and protect important business relationships.
Which businesses need cyber insurance?
In the digital world in which we operate, most businesses face a threat from cyber-attacks. With business systems being accessed by more and more devices and with cybercriminals getting more sophisticated, it’s a threat all organisations need to take seriously. Some industries are more vulnerable than others, though, and International Business Machines (IBM) has stated that the five most targeted business sectors are:
- Manufacturing
- Healthcare
- Government agencies
- Financial services companies
- Construction firms
What are the most common cyber crimes?
While there are a variety of ways that cybercriminals and scammers try and gain access to systems, the most prevalent cyber crimes are:
- Phishing – one of the most common forms of social engineering scams, these use supposedly trusted sources to trick people into passing over information. At one time, these attacks were largely confined to emails, but fake social media presences and cloned websites are increasingly being used, too.
- Malware – malware is a form of malicious software that either seeks to damage an IT system or open the door to another form of damaging software, such as ransomware, access.
- Denial of service (DOS) attacks – these flood systems with bogus requests to overwhelm them and prevent legitimate users from accessing emails or performing routine tasks. These are time-consuming and can cause significant business interruption.
- Compromised identity attacks – these arise from hackers gaining legitimate users’ details and can be extremely hard to detect. These attacks can be performed in several ways, including credential stuffing. Credential stuffing works based on people using the same credentials – email and password – for multiple applications. This is another reason why using the same username and password for multiple log-ins is a security risk.
- Code injection attacks – these involve a hacker injecting malicious code into a vulnerable computer or network to change its course of action. This is just the sort of vulnerability that the preventative action element of a cyber insurance policy can help identify and prevent.
While cyber-attacks are a significant problem for UK businesses, cyber insurance can provide them with the financial protection they need.