Why Cyber Insurance Matters

March 20, 2024

Digital threats loom around every corner, and safeguarding your business against cyber-attacks is paramount to keeping the lights on. Small and medium-sized enterprises (SMBs) are not immune to these threats; they are prime targets due to their perceived vulnerabilities. 

Enter cyber insurance – a vital tool in the modern business arsenal. Cyber insurance provides financial protection against the fallout from cyber incidents, helping businesses mitigate the costs associated with data breaches, ransomware attacks, and other cyber threats. However, cyber insurance is more than just a financial safety net; it offers legal support, reputation management, and incident response assistance when businesses need it most.

Evolutions in Cybersecurity and Cyber Threats

The cybersecurity landscape is constantly evolving, with new threats emerging daily. From sophisticated phishing scams to ransomware attacks, businesses face many risks that can compromise their sensitive data and disrupt operations. In this environment, proactive cybersecurity measures are essential, but even the most robust defenses can be breached.

The Financial Impact of Cyber Incidents

The financial ramifications of a cyber incident can be devastating for SMBs. In 2023, the average cost of a data breach was $4.45 million.¹ Beyond the immediate costs of remediation and recovery, businesses may also face legal fees, regulatory fines, and damage to their reputation. The 2023 Huntress State of Cybersecurity Report revealed that 27% of mid-sized businesses don’t have cyber insurance coverage.²

What does Cyber Insurance cover?

• Financial Protection: At its core, cyber insurance provides financial protection from the costs associated with cyber incidents. From forensic investigations to legal fees and regulatory fines, cyber insurance helps businesses navigate the financial fallout of a data breach or cyber-attack.
• Legal Support: In the aftermath of a cyber incident, businesses may face legal challenges and regulatory scrutiny. Cyber insurance can provide access to legal expertise and resources to help navigate the complex legal landscape and mitigate potential liabilities.
• Reputation Management: A cyber incident can damage more than just a business’s bottom line – it can also tarnish its reputation. Cyber insurance can help companies manage their reputation post-incident, offering PR support and crisis communication strategies to minimize reputational damage and restore customer trust.
• Incident Response Assistance: A swift and effective response is crucial when a cyber incident occurs. Cyber insurance can provide access to incident response teams and resources to help businesses contain the damage, mitigate further risks, and expedite recovery. According to Huntress, 47% of mid-sized businesses don’t have an incident response plan.² Download Dewpoint’s free Incident Response Plan Template.
• Ransomware Recovery: Ransomware attacks have become increasingly prevalent in recent years, posing a significant threat to businesses of all sizes. Cyber insurance can provide ransomware negotiation assistance and financial support to help companies recover from these devastating attacks.

Adapting to the Evolving Threat Landscape

As the cybersecurity landscape evolves, businesses must remain vigilant and adaptable. Cyber insurance is critical to a comprehensive cybersecurity strategy, offering peace of mind and financial protection in an increasingly hostile digital environment.

Is Cyber Insurance Worth It?

While some may question the cost of cyber insurance, the potential financial and reputational costs of a cyber incident far outweigh the premiums. Given the growing prevalence and sophistication of cyber threats, investing in cyber insurance is prudent for businesses of all sizes. 

Next Steps

Want to get instant feedback on your cybersecurity posture? Take our quiz.

Ready to talk about Cyber Insurance with an expert? Dewpoint’s cybersecurity team can help you optimize your cybersecurity strategy and introduce you to insurance firms to discuss policy options. Contact us.

Dewpoint, an award-winning, Michigan-based technology firm, has been helping businesses prepare for, stay ahead of, and respond to IT challenges for over 27 years. From IT security to infrastructure management to automation, cloud migration, and beyond, Dewpoint has long been a trusted technology resource for businesses.

Sources:

1. Cost of a Data Breach Report 2023 – IBM
2. The State of Cybersecurity for Mid-Sized Businesses in 2023 – Huntress