​​Cyber security events are on the rise. From malware to ransomware, businesses are at greater risk than ever from cyber attacks. Is your company protected?
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Proper security requires a well-informed team, tight security protocols, and the right insurance. Here’s an overview of what you should know to be prepared for cyber threats to your operations.

Small business does not mean “small target”:
​Owners of small to midsized businesses (SMBs) often assume they’re under the radar of cyber hackers. In fact, SMBs are the target of 43% of cyber attacks. You may not have billions in profits to drain, but you have essential information hackers seek (such as health records), access through your network to reach larger companies, and files that are so key to your business you’d be willing to pay a ransom to get them back.

Ransomware has increased 300%:
In this form of cyber terrorism, attackers hijack data and demand payment to unlock it. In 2016, an average of 4,000 ransomware attacks occurred each day. This is a 300% increase over 2015. As more and more businesses rely almost solely on digital files and processes, this form of cyber attack continues to grow.

Cyber attackers getting craftier:
Business owners must stay one step ahead of cyber attacks. This is no easy task, since techniques are becoming more targeted and more cunning. One example, which is growing in leaps and bounds, is “spear-phishing,” defined by Google as “the fraudulent practice of sending emails ostensibly from a known or trusted sender in order to induce targeted individuals to reveal confidential information.” An employee who opens this type of email opens your whole system (and those of your networks) to the attacker.

Cyber security requires a multifaceted approach:
To safeguard your business against cyber attacks, you must shore up your defenses on all fronts. This includes:
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• Networking equipment
• Desktop protection
• Privacy programs
• Data security
• Employee security training
• Business continuity
• Data recovery
• Cyber insurance
  
  

Cyber attacks can kill companies:
The average cost of recovery from a cyber attack for SMBs is $36,000; even more frightening is that more than half of small to midsized businesses close their doors within six months of a cyber security event. The final cost includes more than just the cash outlay; it may damage your reputation, making it almost impossible to come back from the attack. It’s essential to have cyber insurance in place to assist you in recovering from the security breach and all that it entails.

Cyber insurance includes:

• Privacy liability – In case you fail to protect sensitive personal or corporate information.
• Payment card loss – In case you fail to properly manage payment card data.
• Data breach – If your data is breached, you will incur costs to retain legal services, notify those affected, and provide those people with credit monitoring services

​​Is your business experiencing growth? While this is good news for the entrepreneur, it also comes with challenges. As your business grows, it undergoes changes and encounters new needs. As you adjust your revenue projections, expand your market, and invest for continued growth, don’t forget another area that should be examined. It’s likely that your insurance needs are also changing.

​To ensure your coverage adequately matches your current risks, remain in close communication with your insurance provider. Your agent can make recommendations for appropriate changes to your policies. Consult with your agent if you experience any of the following situations that often warrant an adjustment in insurance coverage:

​Staff changes: Are you hiring additional staff? Have you transitioned from part-time staff to full-time employees? Are your workers taking on new duties? As you bring on new employees or expand work tasks, it’s important to update your insurance policies to reflect these changes. Appropriate coverage is necessary to protect you and your business if workplace injuries should occur.

​New address: Have you outgrown your location? Relocating to a new setting to accommodate your expanding business involves a lot of work. In the midst of moving, don’t forget to update your insurance. The new building may have a different risk profile that alters the coverage you need.

New features such as security systems may also affect your premiums. Before you choose a new location, discuss the insurance ramifications with your agent so you can budget appropriately.

Equipment upgrades: The equipment your business uses directly affects your insurance premium. If you purchase new equipment to meet growing needs or update old equipment to modernize your business, you must also update your insurance policy.

Expanded services: Are you offering new services or new items? This can affect your liability. Review your current list of goods and services with your insurance agent to verify that you still have appropriate coverage. Add further liability coverage if needed to protect your business from new or additional risk.

Increased revenue: If your business is growing, you are likely experiencing an increase in revenue. While this is good news, it can affect your insurance needs. Keep an eye on policy limits to make sure they remain in alignment with your revenue streams. As you grow, you will probably need to increase coverage limits. Consult with your agent to determine when this bump in coverage should occur.

Specialized growth: Consider any unique needs of your business based on your industry and the types of products and services you offer. As you expand these specialties, you may need to alter your insurance coverage with more specific policies.

For example, if you have grown from a mom-and-pop paper-invoicing shop to a fully digital enterprise, you may want to consider adding cyber insurance.

Vehicle additions: Whether you add a company car for your own use or expand your fleet of delivery vehicles, it’s essential to update your commercial vehicle insurance coverage.
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The policy details will depend on the type of vehicles you purchase, how they are used, and who will be driving them. Work with your insurance agent to create policies that are suited to your growing needs.

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Cyber-crime is no longer a plot device for sci-fi flicks. It’s here, and it’s rampant. It affects countless companies around the world every day. Allianz’s Risk Barometer ranked cyber incidents as the third-highest global risk in 2016. The Insurance Information Institute reports that the average cost of a breach in 2016 was $7 million.

Clearly, cyber insurance has become an essential for business owners. However, not every entrepreneur has a healthy understanding of this coverage. What types of protection are available? What policies are appropriate for you? Where are your greatest risks? It’s important for business owners to answer these questions and get the proper coverage.

Following is a breakdown of the most common types of coverage. Familiarity with this terminology will help as you partner with your insurance provider to determine the best coverage for your company.

• Business Interruption: A cyber-attack can limit your ability to continue operations. You may lose a lot of business while you sort things out. This covers loss of income during that time.
• Crisis Management: If a data breach affects customers, you will incur costs to notify consumers and provide credit monitoring services for them. This also covers the cost of public relations/advertising campaigns you must run in order to rebuild your reputation.
• Cyber Extortion: If your network is threatened by blackmailers, this covers the payment of an extortion threat. It also provides coverage for the cost of tracking down the criminals.
• Loss of Data: Cyber-crime often involves sending a virus or other damaging code into your system. Loss of Data or Data Corruption policies cover the destruction of valuable information.
• Criminal Rewards: If a cyber-criminal attacks your systems, you may offer a reward for information leading to the criminal’s arrest. This insurance will cover the cost of that reward.
• Data Breach: If your data is breached, you are legally liable. This covers expenses related to that legal liability.
• Identity Theft: A common cyber-crime is the theft of customer or employee personal information. If this happens, Identity Theft coverage gives you access to an identity theft call center for assistance.
• Directors & Officers Liability: Company leaders may be at risk or liable for decisions made on behalf of the company. With this policy, key decision makers are protected from cyber liability.
• Cyber Liability: This basic coverage protects you from costs such as legal fees and court judgments that you incur after a cyber-attack. It also covers unintentional cyber mishaps by your company or another company, such as transmission of a computer virus.
• General Liability: It’s important to note that most general liability policies do not cover cyber-crimes.​

​​Everyone is aware of potential scams and malware, but cybercriminals are getting more creative every day.

It’s hard to avoid being hooked. And even tech-savvy employees may fall for the latest scam. For example, would your employees second-guess an urgent request sent by you or one of your high-level execs?

With new, and increasingly more sophisticated, phishing tactics, cybercriminals are poised to invade your company, causing you significant loss.

Your employees are your first line of defense, so the best way to prevent the insurance claims and other costs of cyberattacks is to educate employees. Here are some ways you all can fight back.

Train: Show your employees what phishing emails look like. Share real examples. Seeing what these messages actually look like will better equip them to identify red flags and recognize a scam when they see one.

Test: It might be helpful to simulate a phishing campaign. Your employees can learn by direct experience what to do and what not to do. Be sure to keep the focus on what they can do better rather than what they did wrong. The exercise should educate, not develop mistrust.

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There’s an easy – and important – answer to this question. The truth is, online entrepreneurs need protection just as much as traditional brick-and-mortar (B&M) businesses. Specific coverage will vary somewhat, but commercial insurance is still a must. Here’s why:
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• Your physical assets, whether inventory or equipment, still need protection.
• You are not immune to lawsuits simply because you never see your customers in person.
• You may suffer cyberattacks that cripple your business.
  
  

With this in mind, online business owners should discuss with their insurance agent what types of insurance coverage are appropriate for their operations. And soon.
Typically, online business owners should carry:

Commercial property insurance: Many home-based business owners assume their homeowners policy will cover their business assets. This is generally not the case. For proper protection of inventory, tools, materials, or equipment, you should have a commercial property insurance policy. This will provide coverage in case of theft or damage. Without it, one storm or one criminal could bankrupt your operations.

Commercial liability insurance: What happens if a customer sues you? Any lawsuit related to your business operations will not be covered by your homeowners policy. You need commercial liability insurance to provide coverage for the settlement and your defense costs. Even if you win the case, attorney fees add up quickly. Some companies are more likely to be sued than others, but anyone who provides a service or a product (either online or via B&M) is vulnerable.

Cyber liability insurance: Internet security is essential in today’s online marketplace. Even with the best protocols in place, you are still at risk. If your system is hacked, you may lose sensitive information about your business and your clients. You may suffer costly downtime. And it may impact your customers as well. With so much at stake, you can’t afford not to have cyber coverage.

Workers’ compensation: Do you have employees? Even if they don’t work in a B&M location, both full- and part-time employees must have workers’ compensation coverage. Consult with your insurance agent on exactly what coverage you need based on your operations and employee responsibilities.

Professional liability insurance: Those who don’t sell a product can still get sued. If advice provided in a consultation causes harm, or is perceived to have caused harm, you might get sued. This policy will cover you in these potentially costly cases.

Products liability insurance: This coverage is only needed by those who sell a product rather than a service. Even if you believe your product is completely benign, it’s a good idea to have coverage in place. You might be surprised at how children (or even adults) can hurt themselves. As they say: Better safe than sorry.