Breaking Down the High Price Tag of Cyber Attacks
Posted on: October 27, 2017 by Signature Insurance Group
Most casual news readers did not bat an eye when headlines claimed the cyber attack on Target cost the corporate retailer a minimum of $162 million. The bigger they are, the harder they fall, right? Unfortunately, the relative cost associated with cyber attacks is just as damaging, if not more so, for small- and medium-sized businesses. In fact, according to the U.S. National Cyber Security Alliance, 60% of small businesses fold within 6 months of a cyber attack under the crushing weight of an average $117,000 in associated costs.
To make matters worse, many smaller business owners don’t understand the value of cyber liability insurance in these circumstances. They may even erroneously believe they are low risk targets or that the costs of an attack wouldn’t be debilitating. Granted, the reasons for the high price of cyber attacks are not always intuitive. To give you an idea, here are some of the highest costs associated with cyber attacks:
- Government fines
- Credit card company fines
- Overtime for IT investigation
- Attorney’s fees
- Class action lawsuits
- Repairing or replacing damaged computers
- Recovering data
- Notifying customers and clients of the breach
- Credit monitoring services for affected customers and clients
Some costs are even more abstract and difficult to quantify, such as the costs associated with downtime. Not only is no business being conducted in the aftermath of an attack, but salaried employees must still be paid without being able to contribute work.
Reputation damage is especially hard on smaller businesses. Large corporations stand a better chance of regaining consumer trust over time, and they have more resources to weather the storm until their customers come around again. Small businesses don’t have this luxury, making cyber liability insurance even more important.
Non-corporate businesses might think they’re too small for any criminal to want to mess with them, but the statistics continually show that smaller enterprises are routinely victims of cyber attacks, and they stand a lot more to lose when they are. Part of this increased risk may be caused by criminals having easier access to local businesses or the perceived unpreparedness of smaller companies versus corporations, which can usually afford all the latest IT security bells and whistles.
In an era when nearly every business uses electronic data transmission, proper insurance protection is often the deciding factor in a business failing or recovering from an attack. With Forbes predicting the global cost of cyber crime to hit $2 trillion by 2019, the risk is only going to get higher, making cyber liability insurance a true must-have for every business.
About Signature Insurance Group
Signature Insurance Group has been working since 1969 to provide comprehensive insurance solutions to individuals and businesses across the United States. We offer a range of insurance products and services in risk management, employee benefits, business insurance, and personal insurance, and we pride ourselves on our commitment to creating “Signature Relationships” with our clients where we commit to providing the best, most comprehensive service possible. To learn more about our goods and services, contact us today at (800) 464-3606.