The modern cybersecurity insurance challenges SMBs face today
Surviving the modern digital landscape is a measure of many things. Budget, resources, staff, and preparedness for breach outcomes is one aspect of maintaining data safety. But even with the best intentions and resources, intrusions do happen.
In the case of ransomware, attacks maintain high volume, and it’s a guarantee a business will be impacted by one. In the case of ransomware attack – or any equivalent breach event – networks are left reeling from the damages. Associated costs include downtime, data recovery, hardware loss and replacement, brand damage, and ransomware payments. To mitigate this, businesses seek out cybersecurity insurance providers, a growing trend in the IT realm.
Cybersecurity insurance is a fairly new industry that’s grown over the past several years, partly in response to the rocketing costs associated with breaches. However, this industry is also rapidly changing, and it’s becoming harder for organizations to find providers that will cover their cybersecurity or IT related damages.
The increase of costs
So why is cybersecurity insurance rising in cost? One reason is the escalation of cyberattacks and widespread demand for coverage. In other words, it’s harder to maintain a business if you frequently pay out to multiple companies.
Complications of inflation and recession impacts are another impacting cause, forcing providers to raise their service costs. Stricter regulatory demands for breach reporting and general increase in cyberattacks all create the perfect storm of escalating costs.
As a result, SMBs discontinue their insurance contracts, or can’t afford to renew them. More so, as premiums rise, what cybersecurity insurance providers are willing (or able) to cover is diminishing. And, limitations on what coverage they provide is also reducing to manage their own internal costs.
What it means for a business enterprise
The new reality of cyber insurance is thus: higher premiums, reduced coverage, and stricter requirements. Providers can no longer afford – or are unwilling to – cover every expense related to intrusion events.
It’s similar to other insurance models. In the auto industry, for instance, if accidents increase and drivers are less safe, premiums go up and coverage options are reduced.
Unlike auto-insurance, however, when insurance firms were new, cybercrime and its related attacks were not as common as today. Ransomware events, for example, were major operations conducted by experts with sponsored resources. Now, they’re an accessible commodity to even the newest of hackers.
With fewer options, fewer insurance providers, and less coverage, what becomes of SMBs now?
Establishing a strong security culture
One major reason cybersecurity insurance providers are less forgiving is because of competency reasons. Providers are less willing to work with entities demonstrating a lack of concern for protecting their data, and rather leave it to insurance companies to cover costs.
Another aspect of cybersecurity and IT is the evolution of technology and its relation to business models. Faster data speeds, virtualized services, cloud computing, and remote working are among the leaders in developing tech, with AI learning and machine adaption coming up behind to reduce redundancies while improving security. Because of this, insurance providers have more options to cover, but follow regulatory developments and maintain stricter requirements for what they can provide for.
The long and short is, with forced limitations and provisions in the mix, insurance is no longer sufficient for an SMB to rely on in case of red-flag scenarios. The onus of data protection falls on the business itself.
That, of course, is easier said than done. Given the circumstances then, companies must focus on powerful new governance strategies for IT and cybersecurity. That too, is also easier said than done. However, as cybersecurity evolves in demand, complexity, and need, businesses must develop strategies and plans to integrate comprehensive security solutions in their production model.
Cybersecurity attack reduction and mitigation
While acquiring a cybersecurity insurance policy isn’t impossible, it’s clear that SMBs cannot solely rely on a contract to cover breach costs. Therefore, more than ever, SMBs must implement comprehensive strategies into their architecture or risk critical breaches.
But how to do this? While it depends on the size of an enterprise and a companies’ unique needs, there are strategies to readily implement which are also cost effective.
Cultivating a Secure Culture
When staff and management understand the need for increased security and maintain good cybersecurity hygiene, the business is safer. You can accomplish this by:
- Enacting zero-trust policies and architecture
- Enrich staff with comprehensive education about cyber threats like phishing and social engineering
- Creating a simple but effective report policy
- Implement MFA (multi-factor authentication) for all relevant business-facing devices\
- Invest in password managers and strong password requirements
Don’t forget that powerful tech is still at your disposal, and, is cost sensitive. Solutions exist, such as:
- Using cloud computing and virtual options for both resilience and scaling infrastructure
- Implementing remote-work policies
- Learn to identify phishing and utilize automated monitoring tools
Also, be sure to conduct rigorous examinations of your current internal policies and level of resilience. Penetration testing, for example, is a powerful way to gauge where your enterprise is both weakest and strongest.
Doing so creates a foundation for better strategies to develop a comprehensive plan. Furthermore, creatin digestible data reports with meaningful, actionable results is another key component towards mitigating cybercrime.
Cybersecurity insurance is changing and wildly impacted by a surge of threats, economic factors, and cybersecurity competency. As such, it’s likelier SMBs will go without a form of insurance, if not completely. However, these SMBs still need backup options in case of a breach event or data loss.
The good news is, you’re not alone. While insurance is harder to acquire, third-party resources are available. A managed service provider can offer comprehensive answers for various IT needs at affordable price options.