Many small business owners argue that investing in cybersecurity is too expensive. Many believe that the chances of falling victim to cybercrimes are low. Others would rather take the chance than invest in security. According to CyberPolicy, many of these business owners do not consider the true cost of a cyberattack and how cyber liability coverage can help your business tide through an attack.
Stories of cyber thieves stealing information from large corporations are common these days. However, the fact that you own a small business doesn’t mean you’re safe. The fact that two-thirds of the 28 million small-and medium-sized businesses in the U.S. contributed to $7.5 trillion to the nation’s economy in 2013 makes small businesses attractive to cyber criminals. According to Symantec, 43 percent of cyberattacks in 2015 were directed at small and medium enterprises.
In reality, any business that collects and stores personal data such as bank details, birth dates, addresses or social security numbers from customers, employees or suppliers is at risk of a data breach. A data breach can be even more devastating for a small business than for larger corporations because it is less likely that an SMB can recover from even a single incident.
Counting the Cost
The average cost of a single cyberattack on a small business in 2013 was estimated to be $9,000. This figure however does not cater for the cost of damage to the business’ brand name and many other costs as outlined below:
- Loss of Business
A breach in security often results in a business having to shut down its electronic operations for a while. For small businesses that run entirely online, this will mean shutting down all operations. Determining the origin of the attack and resolving issues can take days, weeks or even months. Correcting a security breach can be frustratingly time consuming. Your business will lose a lot of revenue during this down time.
- Damage to the Reputation of Your Business
One of the biggest costs to businesses that fall victim to cyberattacks involves damage to their reputation. While this can be difficult to quantify, the effects are obvious in terms of how much business the company will lose. The data breach that Target experienced cost them $148 million. While the retail giant was able to overcome the financial costs of the attack, damage to the brand’s reputation is still healing. The loss of customer confidence and hesitation to share personal information or shop online cost billions in potential revenue.
- Exposure of Company Assets
Failure to invest in cybersecurity will result in exposure of your company’s assets. Once your account information is stolen, it’s only a short while until your finances are impacted as well. It is important to note that banks don’t cover losses suffered as a result of cyberattacks. If you lose your working capital as a result of such a breach, your business is likely to suffer.
Data breaches can also result in the loss of other assets such as product designs, intellectual property, customer records, employee information or company strategies.
- Law Suits
If you store personal information provided to you by your customers, employees or suppliers, it is your responsibility to protect it. Failure to do so can result in litigation by third parties. Lawsuits can be expensive. You’ll have to cater for legal fees, penalties and compensations, if a ruling is made against your business. This can easily render a small business bankrupt.
Protect Your Business
By investing in cyber liability coverage, you’ll be paying a few hundred dollars per year to avoid paying hundreds of thousands of dollars in the future. Small businesses are particularly vulnerable to cyberattacks. If you want to ensure that you are not a victim, begin taking cybersecurity seriously. Protect your assets with cyber liability coverage.
