Types of cyber threats
Your business faces many types of cyber threats, from ransomware attacks to business email compromise. Read how our team of brokers explain these common cyber attacks and show how a cyber insurance policy can be arranged to respond to them.
Business Insurance | Types of cyber threats
Understanding Cyber Threats and How Insurance Can Respond
For technology companies, cybersecurity is a fundamental business risk. While strong defences are your priority, it’s important to have a plan for when an incident occurs. The types of cyber threats are constantly evolving, and a cyber attack can cause serious financial and reputational damage.
Recent UK government data shows just how common this has become, with half of all businesses reporting some form of cybersecurity breach or attack in the last 12 months (UK Government, 2024). Understanding and asking, what does cyber insurance cover in the UK, is a key step in building resilience. It is designed to help you respond to and recover from an incident, help to provide financial support and access to specialist expertise when you need it most.
Here, we look at some of the most common cyber attacks that can be covered by insurance and explain how a policy can help your business manage the fallout.
Types of cyber threats
Ransomware and Cyber Extortion
A ransomware attack is when a criminal encrypts your files or entire computer system, making them inaccessible. They then demand a ransom payment, usually in cryptocurrency, in exchange for the decryption key. Modern attacks often include data theft, where criminals threaten to publish your stolen sensitive data if the demand is not met. This is a form of cyber extortion.
How can ransomware insurance coverage help?
A cyber insurance policy can play a key role when managing a ransomware event. Cover can be arranged to assist with:
- Incident Response: Where included in your cover, immediately connecting you with technical experts to contain the attack, investigate its scope, and begin recovery. This also includes legal specialists to advise on your obligations. Check with your insurance partner to see if this is included, as not all policies cover the same level of response.
- Extortion Costs: A policy may cover the cost of the ransom payment itself, following consultation with security specialists. It can also cover the fees of professional negotiators who will handle communication with the attackers.
- Business Interruption: If the attack brings your operations to a halt, this cover can replace the income you lose during the downtime. It may also fund the increased costs of working, such as hiring temporary equipment or using alternative facilities to get back up and running.
- Data Restoration: Covering the costs of rebuilding your systems and restoring data from backups. This can be a complex and expensive process requiring specialist IT support.
Phishing and Business Email Compromise (BEC)
Phishing attacks use deceptive emails, texts, or messages to trick employees into revealing sensitive information, like login details or passwords. Business Email Compromise is a more targeted form of attack where criminals use a compromised email account to impersonate a senior executive or a supplier. Their goal is often to trick your finance team into making fraudulent payments to an account the criminal controls.
How can phishing insurance coverage help?
The response depends on the outcome of the attack. Cyber policies can be arranged to include:
- Forensic Investigation: If an account is compromised, specialists can determine how the breach occurred, what data was accessed, and how to secure the system against further attacks.
- Liability Cover: If the phishing attack leads to a data breach affecting your clients, this cover can assist with legal defence costs and any damages you become legally obligated to pay.
- Financial Loss: Some policies can respond to the direct financial loss suffered from a fraudulent payment transfer resulting from business email compromise insurance. This is often part of a ‘Social Engineering’ or ‘Cyber Crime’ section of a policy.
Data Breach Events
A data breach is the unauthorised access and disclosure of sensitive, protected, or confidential information. For a tech company, this could involve your own intellectual property, employee records, or, most critically, the data of your customers. Breaches can result from a malicious hack, an accidental email to the wrong person, or a lost or stolen company laptop. In the UK, a significant data breach requires you to notify the Information Commissioner’s Office (ICO).
How can data breach insurance help?
Responding to a data breach is complex and time-sensitive. A policy can help by arranging cover for:
- Regulatory Defence and Fines: Assisting with the legal costs of responding to an investigation from the ICO or another regulator. It can also cover regulatory fines, where legally insurable.
- Notification and Credit Monitoring: Funding the costs of notifying affected individuals, as required by law, and providing credit or identity monitoring services to help protect them from fraud.
- Public Relations: Providing access to PR experts to help you manage communication, protect your company’s reputation, and maintain the trust of your customers and partners.
Other Cyber Risk Types for Insurance cover
Cyber insurance is not a replacement for strong security measures, but it is a vital component of a complete risk management strategy. An experienced broker can help you understand the specific cyber insurance threats coverage relevant to your tech business and arrange a policy that meets your needs.
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Other Cyber Risk Types for Insurance cover
Cyber insurance is not a replacement for strong security measures, but it is a vital component of a complete risk management strategy. An experienced broker can help you understand the specific cyber insurance threats coverage relevant to your tech business and arrange a policy that meets your needs.
Distributed Denial-of-Service (DDoS) Attacks
The Threat:
An attempt to make an online service unavailable by overwhelming it with traffic from multiple sources. This can take your website, client portal, or other critical online systems offline for an extended period.
How Insurance Can Respond:
The primary cover here is Business Interruption, which can compensate your business for the income lost* while your systems are down. Incident Response cover can also provide technical expertise to help mitigate the attack and restore service.
*Dependent on terms and conditions
Supply Chain Compromise
The Threat:
Your business relies on third-party software and service providers. If one of your key suppliers suffers a cyber attack, it can directly impact your own operations, even if your own systems are secure. This is a significant cyber risk for the interconnected tech sector.
How Insurance Can Respond:
A policy can be arranged to include Contingent Business Interruption. This extends your business interruption cover to incidents that affect a named supply chain partner, helping to protect your income from disruption you do not directly control.
Insider Threats
The Threat:
This risk comes from within your organisation. It could be a disgruntled employee intentionally stealing data or causing damage (a malicious act), or a well-meaning employee who makes a mistake, like accidentally deleting a critical database (an operator error).
How Insurance Can Respond:
Cover can be arranged for Data Restoration costs and Incident Response to investigate and fix the issue. If the insider threat leads to a data breach, the Liability and Public Relations sections of the policy would also be essential.
Other Malware (Spyware, Trojans, Viruses)
The Threat:
Malware is a term for any malicious software. While ransomware is a prominent example, other types can be just as damaging. These include spyware designed to secretly steal your data, trojans that disguise themselves as harmless programs to create backdoors into your network, and viruses that can corrupt data and disrupt your operations.
How Insurance Can Respond:
- Incident Response: This cover is often the first to be triggered. It can give you access to IT forensic specialists to investigate the breach, identify the type of malware, and work to remove it from your systems.
- Data and System Recovery: If malware damages or corrupts your data or software, cover can be arranged for the costs of restoring your systems from backups to their pre-attack state.
- Business Interruption: Should the malware cause significant system downtime that stops you from trading, cover for business interruption can help compensate for the income you lose during that period.
Cryptojacking and Botnetting
The Threat:
These attacks occur when a third party hijacks your computer systems for their own use. In a cryptojacking attack, they use your system’s processing power to mine cryptocurrency, which can lead to severe performance issues and higher electricity bills. With botnetting, your systems are used as part of a network to conduct large-scale attacks on other organisations, which could lead to your company’s IP addresses being blacklisted.
How Insurance Can Respond:
- Incident Response: As with other attacks, this cover is key. It helps pay for the technical expertise needed to find the source of the breach, eject the intruder, and secure your systems against a repeat incident.
- Increased Cost of Working: If the hijacking slows your operations, cover may be available for the extra expenses you incur to keep the business running, for example, by renting additional server capacity.
- Business Interruption: If the performance degradation is so severe that it interrupts your business operations and leads to a loss of income, this section of a policy may respond.
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Cyber Risks Insurance FAQs
This is one of the more complex areas of cover, so to help you get the protection you need, here are our Cyber Insurance frequently asked questions. We hope they will be of use, but if you’d like some personalised independent advice, please call us on 01903 444 951, and one of our specialists will be happy to help.
No, but given the size of the threat and the damage a successful attack can do, it’s well worth taking out.
At Jensten Insurance Brokers, we’re committed to finding our clients a great deal on quality cover. Having provided many Cyber Insurance quotes, we’ve learned a thing or two about how to save money on a Cyber Insurance policy, including:
- Loss mitigation – proactive cyber security measures can significantly reduce your chances of having to make a claim. The UK Cyber Security Council have identified user error as the number one reason for a successful attack. Weak passwords, software updates left uninstalled, and users opening contaminated emails were at the root of 56% of all successful attacks in 2022.
- Get some independent advice – this is especially for larger organisations that have employees. When seeking a Cyber Insurance quote, get some advice from a specialist broker who understands the risks and who can provide you with the protection you need.
- Shop around – or better still, get an independent broker such as Jensten Insurance Brokers to do the shopping around for you. With our specialist knowledge and insurer contacts, we can help you get the right cover at the right price. To get a Cyber Insurance quote, call us on 01903 444 951, request a callback, or start your Cyber Insurance quote today.
Getting a quote is easy. You can call us on 01903 444 951, request a callback, or start your Cyber Insurance quote today.
While cybercriminals prefer to attack larger organisations, smaller ones aren’t immune, and the self-employed are also at risk.
If your business is online, it’s likely to face several threats, from being locked out of your site to having your social media channels hacked. E-commerce businesses are particularly attractive as they can offer access to customers’ private data and even financial information.
Typically, you won’t be able to make a claim if:
- The attack came from within your organisation.
- It occurred owing to wilful negligence.
- Basic security wasn’t in place.