Nashville insurance insight: Does your small business need to worry about cybersecurity?
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Whether you’re a business owner in Nashville or an employee, I’m sure you’ve been paying close attention to cybersecurity in recent years — particularly in the wake of the massive Equifax security breach, which affected 143 million American consumers.
As citizens, we were (and are) all left worried about whether our information was breached, whether our identities might be stolen, and what we could do to protect ourselves now and in the future.
If you’re an entrepreneur/small business owner, odds are you also got to thinking: Do I know enough about how cyber risk could affect my business? Am I protected?
The state of cyber risk for businesses in 2018
There’s lots of information out there about the unfortunately growing threat of cyber attacks on businesses — you can easily get lost in an Internet hole researching it. But here are, I think, a few key data points worth noting, from a late-2016 white paper on Cyberrisk by the Insurance Information Institute:
— Data breaches are getting more common, and more frequent. In 2015, 781 were reported, exposing almost 170 million records. In just the first half of 2016, more than 500 breaches had already been reported.
— Those are just the reported breaches; industry organizations say many, if not most, go unreported and undetected.
— Cybercrime costs the global economy between $375 billion and $575 billion a year, according to estimates from McAfee and CSIS.
— In 2016, the annual Allianz Risk Barometer moved cyber incidents into the top 3 global business risks
If you store sensitive records — customer data, proprietary info — it’s certainly worth getting familiar with what you’re up against. But it’s also more than just records being mined. As our homes, businesses and products get more connected, more risk rises up — today, anything from smart-home devices to cars are vulnerable to hacking.
One recent example: Two men were accused of hacking vehicles in the Houston area — reports said they were able to grab more than 100 cars using just a laptop.
Ransomware attacks — where a hacker takes over your systems and holds data until you pay them — are alarmingly common, too — recent research showed that nearly 40 percent of businesses were on the business end of a ransomware attack in the past year. More than a third of those lost revenue in the wake of an attack; 20 percent of those businesses had to shut down completely.
The myth of being too small to hack
Regardless of the size of your business, cybersecurity is something we have to think about in 2018. That doesn’t mean every mom-and-pop business needs a massive insurance policy geared toward cyber risk. But it does mean we at least need to consider our vulnerability and where we can better protect ourselves.
Key detail: We might hear the most about big businesses like Equifax and Target getting targeted, but Travelers estimates that 62 percent of all data breach victims are small and medium-sized businesses.
A report from the U.K. noted that more than half of medium-sized businesses had experienced a breach in the past year; about a third of small businesses, too.
So the idea that an upstart or neighborhood Nashville business is too small for digital troublemakers to notice: not an accurate one.
Some experts say malicious actors are particularly drawn to smaller businesses, who likely don’t have as strong a digital defense system as bigger players.
Cybersecurity and Nashville
One of the reasons I think Nashville businesses need to be on top of this topic: The Identity Theft Resource Center notes that the the majority of the 781 data breaches in 2015 hit business and medical/healthcare organizations.
And, as it happens, we might just as well be known as Health Care City, since a quarter of total occupations in the Nashville area — some 249,000-plus local jobs — are in the healthcare industry. Almost 400 health care companies operate in Nashville, with another 400 firms working to support those companies.
Protecting a Nashville business against cyber threats
I can’t really speak to data security, but I can share a little bit about insurance options to protect you in case of a cyber attack/data breach.
Your standard Business Owners Policy (or BOP) usually covers things like electronic data loss — potentially helpful if a virus or harmful code wipes out your system. (This gets tricky if actions of any of your employees led to the data loss.)
Loss of data isn’t usually the major money-loss driver that arises with a cyber attack, though. In a recent survey from Allianz, business owners marked loss of reputation (69 percent) and liability claims (52 percent) as their biggest issues, and a standard BOP generally won’t help there.
What you can do: Look into additional endorsements that’ll address the damage a breach might bring, like cyber liability, business interruption, ransomware attacks and the like.
Several of the insurers I work with, including Travelers, offer insurance options designed specifically to mitigate cyber risks. If you’re a Nashville business owner and want to know more, I’d be glad to share some more details with you.
Any other questions about small business insurance in Nashville? I’m always happy to help. Call or email Tucker Coverage here, or grab an online small business insurance quote here.