Small and medium sized businesses (“SMBs”) operate on the leanest of budgets, and SMB owners typically scrutinize every expenditure, regardless of how small it may be. This tendency can lead an SMB to overlook or ignore network cybersecurity if, for example, the SMB has installed a simple network firewall or antivirus software on its computers and mobile devices. SMBs are exposed to network data breach risks that are equal to or greater than the risks faced by larger companies with big cybersecurity budgets.
Those risks will never be eliminated, but SMBs can protect themselves from them with network cybersecurity insurance. SMB industry experts generally point to at least five reasons why SMBs need this insurance.
- SMB computer networks are a prime target for hackers.
SMBs typically store and maintain significant amounts of data about their customers and clients, but install fewer protections over that data to keep it away from hackers. This places SMBs directly in the hacker “sweet spot”. More sophisticated hackers might use an SMB’s less secure network as a stepping stone to launch a cyberattack against a larger company that is one of the SMB’s trading partners. As long as SMBs continue to underestimate their exposure to cyberattacks, hackers will target their networks for the rich mother lode of information it can provide.
- A network breach can put an SMB out of business.
Even apart from any damages and liabilities that an SMB might incur as a result of a network security breach, an SMB can face ruinous litigation costs following a breach. SMBs can face legal defense bills in the tens of thousands of dollars well before any resolution or settlement of network breach liability claims. Network cybersecurity insurance can cover some or all of these defense costs and allow an SMB to focus its money and energy on managing the SMB and recovering from the breach.
- Customers and clients are more likely to do business with an SMB that maintains network security insurance.
Cyberattacks and data losses can have a detrimental impact on customer loyalty. Both large and small businesses across every industry sector know that they cannot prevent every possible cyberattack. The best they can do is to provide mechanisms to help them and their customers recover from a data breach and to protect personal and financial data that is exposed in an attack. Customers will be more comfortable and will be more likely to remain loyal to an SMB when the SMB maintains network security insurance that makes compensation available if and when a cyberattack occurs.
- Network security insurance helps an SMB to embed cybersecurity awareness among its employees.
SMB employees usually assume a variety of roles within the company. Performing many different tasks can obscure an employee’s individual cybersecurity obligations. An SMB that procures network security insurance will typically work with the cybersecurity insurer to identify critical data assets and to create awareness among employees about basic data security practices. This will elevate employee awareness of the cybersecurity risks that the SMB is facing, leading to better cybersecurity practices among those employees.
- Network security insurance will help an SMB to formulate an objective response strategy to a data breach.
Preparation is the key to surviving a cyberattack. Most SMB’s have little or no strategy with respect to how they would respond to a data breach, ransomware attack, or other successful hack of their internal networks. Network security insurance providers can work with their clients to develop a mechanism for reacting and stopping a cyberattack. Those strategies will include, for example, quickly communicating the occurrence of the attack to affected parties, offering identity protection services to customers whose data might have been compromised, and improving network security to limit or prevent future attacks.