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Cyber Risks: Don’t Underestimate the Impact

Cyber Risks: Don’t Underestimate the Impact
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Cyber Risks: Don’t Underestimate the Impact

Cyber-attacks are posing increasing risks to companies of all sizes and in all sectors, not just e-commerce organisations. But, as CapitalSpace’s expert insurance partners, Absolute Insurance Brokers, warn, many smaller companies have inadequate protection for the potential operational and reputational damage.

Cyber damage  

Cyber-attacks are, unfortunately, becoming increasingly common.  A reliable insight into their impact was provided by the Small Business Reputation and the Cyber Risk report, launched earlier this year by the Government’s Cyber Streetwise campaign and KPMG

The report found that the impact on the SMEs surveyed who had experienced a breach was long lasting; one in four (26%) had been unable to grow in line with previous expectations, and almost a third (31%) said it took over six months for the business to get back on track.

A cyber-attack can directly impact on business operations, but it can do equal damage to reputation.  83% of consumers surveyed by the researchers were concerned about which businesses have access to their data and whether it is safe, and over half (58%) said that a cyber breach would discourage them from using a business in the future.

Cyber awareness

Despite the real threats of cyber breaches, the report concluded that UK small businesses are underestimating the impact cyber-attacks could have on their reputation and need to do more to protect themselves.  Of the companies surveyed who had not experienced a breach, less than a third (29%) said the potential damage a cyber breach could cause was an ‘important’ consideration.

However, the need to protect against cyber threats is something that may no longer be an optional extra; the recently passed EU General Data Protection Regulation (GDPR) is likely to impact on UK SMEs, despite Brexit.  The GDPR is due to come into force in early 2018; after that, firms which fail to comply with the new regulations will be subject to fines of up to €20m (£15.4m) or 4% of turnover, whichever is greater.  This will put cyber insurance at the same level of importance as motor and employers’ liability insurance for many SMEs, especially those trading overseas.

The need for cyber protection is not restricted to those operating in the e-commerce sphere.  Any company which is reliant on computer networks, digital information or the internet, faces major cyber exposures; this means most SMEs face some level of risk.

Cyber protection

In many cases, traditional insurance policies may not respond to losses involving IT, however you can create an effective information security package by getting expert advice from information security consultants and assessing your exposures with your insurance coverage needs.

Cyber insurance can deliver protection for SMEs in many ways including:

  • Third-party and employee privacy liability for damages and claims expenses as a result of a privacy breach
  • Notification expenses to notify victims of privacy breaches
  • Forensic costs to contain a breach and carry out the necessary forensic audits following a breach
  • Public Relations (PR) expenses to help limit the reputational impact following a security breach
  • Payment Card Industry (PCI) fines
  • Multimedia Liability, Intellectual Property Infringements and Libel and Slander due to email or website content
  • Data/Electronic information loss: the costs to restore data that has been lost or corrupted
  • Indemnification for loss of revenue following unplanned system outage and increased cost of working
  • Cyber extortion coverage: covers both the costs of investigation and the extortion demand amount related to a threat to commit a computer attack
  • Cyber terrorism coverage
  • Reputation coverage extension (in some cases).

Effective cyber protection could help keep your company on track, should the worst happen.

More expert advice from CapitalSpace and Absolute Insurance Brokers:

Five steps to getting your risk assessments right

Protecting your business and your personal assets

ABOUT ABSOLUTE INSURANCE BROKERS

Established in 2009, award-winning Absolute Insurance Brokers work across a wide spectrum of industries and professional services, from start-ups to large nationals.  Their specialist advice includes areas such as risk prevention and health and safety measures.  Absolute’s philosophy as independent brokers is to provide complete peace of mind for their customers by understanding their businesses to develop the right type of insurance program to ensure their requirements are met.  This approach, underpinned by first-class personal service, has underpinned Absolute’s growth, from a starting point of just 3 members of staff to more than 20 employees.

Steve Salter – Head of Trading

Steve recently joined Absolute Insurance Brokers with 29 years’ experience working for a global insurer, where he led a team of cross class underwriters handling all classes of general insurance.  This has provided Steve with an unparalleled understanding of the risks businesses face and an insight into insurers’ approach to risk.

Warren Merton – Director

Prior to co-founding Absolute, Warren worked in the insurance industry as both a broker and underwriter for over 20 years.  During this time, he undertook roles in both the London market and regional operations.  This included working for a number of leading insurers and national brokers in both commercial underwriter roles and new corporate business development.

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