Using computers and the internet to store data is a boon to many companies. The convenience and abundance of available storage is something few could have imagined a generation ago. Yet with the benefits come certain drawbacks; more valuable data stored on the internet presents more opportunities for devastating cyber crime.
Cyberattacks are on the rise. Companies as large and influential as Colonial Pipeline and JBS were recent victims of ransomware attacks. All cybercrime taken together is comparable to the third-largest economy on Earth. From 2015 to 2020, damages due to ransomware increased exponentially from $24 million to $170 billion. As more people become connected to the internet and more work takes place online, cybercriminals’ chances to profit off of exploitation increase.Â
While large corporations make for more lucrative targets, small to midsize businesses (SMBs) have the most to lose in the event of a cyber attack. 66% of SMBs fell victim to at least one cyberattack in 2020. If hacked or the victim of a data breach, 60% of SMBs go out of business within six months. A single successful cyberattack can cost a company everything. Their money is stolen in ransom, extortion, or recovery efforts. Their productivity is halted when systems shut down. Their privacy is invaded when personal information can be publicized. Perhaps worst of all, their reputation as a business is sullied when a breach is revealed.
How does cyber insurance protect against these damages? For SMBs, cyber insurance policies usually cover up to $1 million in damages. Coverage includes profit losses (including that which arises from reputation damage or halted operations), liabilities (namely contract penalties and media fines), and lawsuits (both class-actions and regulatory investigations). While it doesn’t cover everything, many businesses consider cyber insurance worth the investment.
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