The emergence of A.I. and constantly evolving technologies have increased awareness of cybercrime and how to protect companies against it. With more and more business happening virtually, protecting digital assets and expensive technology is more critical than ever.
You may still be wondering if you really need cyber insurance. Below, we outline what cybercrime entails, the types of threats companies can face, and how cyber insurance can help.
What is cybercrime, and how common is it?
Cybercrime is a type of criminal activity that uses computer networks, the Internet, and other forms of digital communication technology to commit illegal acts. Cybercriminals use a variety of techniques and tools to conduct their activities, including:
- Social engineering
Cybercriminals may steal employee and client information for identity theft, disable your computer systems, misdirect funds, abscond with inventory or appropriate proprietary technology, or steal intellectual property.
Statistics Canada reports that about 18 per cent of Canadians experienced cybersecurity incidents in 2021. This included 16 per cent of small businesses, 25 per cent of medium businesses, and 37 per cent of large businesses. While most of these crimes were perpetrated by people outside the company, employees and known parties such as suppliers or customers accounted for 11 per cent of the incidents.
What types of cyber threats do companies face?
The main types of cyber threats that affect businesses are:
- Phishing attacks: These crimes involve tricking people into divulging confidential information such as usernames and login IDs. Phishing attacks often take the form of fraudulent emails or websites that appear to be from a legitimate source.
- Malware attacks: Malware can be used to infect systems with viruses or spyware, which can cause damage to systems or steal sensitive information.
- Ransomware attacks: Ransomware is malware that encrypts computer files and demands payment in exchange for the decryption key.
- Denial of Service (DoS) attacks or Distributed Denial of Service Attacks (DDoS): DoS and DDoS flood a targeted website or computer network with traffic, overwhelming it and causing it to become inaccessible to users. These attacks are usually carried out using a network of bots so that all the traffic hits the network at the same time.
- Internet of Things (IoT) attacks: IoT devices, such as smart locks and security cameras, industrial sensors, medical equipment, and asset tracking devices, can be vulnerable to attack and potentially provide access to sensitive information.
What risks do cyberthreats pose to a business?
Cybercrime opens businesses up to a wide range of risks, including:
- Financial losses: Cybercriminals can steal money directly from businesses through fraud or theft. They can also cause financial losses indirectly by disrupting business operations or stealing sensitive financial information.
- Reputational damage: Cyber attacks can damage a business’s reputation, leading to loss of customer trust, negative publicity, and potential legal action.
- Data loss or theft: Cybercriminals can steal sensitive data, such as customer information, proprietary business information, and intellectual property, which can result in significant financial and legal consequences.
- Business disruption: Cyber attacks can disrupt business operations, causing downtime and missed deadlines.
- Compliance errors: Businesses that fail to protect sensitive data or comply with regulatory requirements may face significant fines or worse.
Canadian businesses spent about $10 billion on cyber security in 2021, a significant increase over 2019 figures. About 40 per cent of the affected businesses experience downtime, with an average duration of 36 hours.
What is cyber insurance?
Cyber insurance can help protect businesses against losses resulting from cyber attacks or data breaches. Cyber insurance policies may cover a range of costs associated with a cyber attack, including legal fees, fines from credit card companies, regulatory fines and sanctions, the cost of repairing or replacing damaged systems and data, and the cost of replacing inventory or supplies. Insurance policies vary widely in terms of coverage and exclusions, so be sure to work with your insurance advisor and legal team to ensure any policy you’re considering covers the unique risks your business faces.
Does my business need cyber insurance?
Some types of businesses are at a higher risk for cyber incidents, like e-commerce companies, healthcare providers, financial institutions, technology companies, and smaller businesses that don’t have the resources to invest in state-of-the-art cybersecurity. But if your business uses digital technology connected to the Internet at all, it faces some level of risk from cyber threats. Because of this, any business that relies on computer systems, the internet, and other forms of digital technology can benefit from cyber insurance.
How to get cyber insurance for your business
Northbridge Insurance is your trusted partner in industry-specific insurance solutions and risk management solutions. By working with our trusted commercial insurance broker network, we have helped Canadian businesses of all types protect against cybersecurity risks, allowing them to focus on business operations instead of risk management.
Cyber threats are unlikely to go away anytime soon. If your business has digital assets, sensitive information, expensive computer equipment or other costly technology, you can benefit from our cyber risk insurance. As an added benefit, our cyber insurance clients are given access to Cyber Assist*, a consultation service that can help companies with both proactive and reactive measures against cyber incidents.
This blog is provided for information only and is not a substitute for professional advice. We make no representations or warranties regarding the accuracy or completeness of the information and will not be responsible for any loss arising out of reliance on the information.
* Services provided by CyberScout, LLC. Services are not included in any cyber extension or endorsements. Services are not an insurance policy. [Not all policies are eligible, contact us for details.]