Cybercrime insurance is essential for businesses in the digital world, but how much should you invest in this protection, and are there other ways to manage the risks?

Who needs cyber insurance?

Any organisation using the internet needs to guard against cybercrime. Whether you’re a small business or a large corporation, if you rely on online systems for operations, communication, or data storage, you are at risk. These risks include data breaches, ransomware attacks, and phishing scams, which can lead to financial losses, reputational damage, and legal consequences.

Benefits of an effective cyber insurance policy

Information security

This is where cybercrime law and data protection overlap, while cybercrimes involve criminal activities like hacking, phishing, and ransomware attacks. Implementing some form of cyber insurance prevents unauthorised access to sensitive information.

Reputation

Cyber incidents are simply not a good look. Taking proactive steps to prevent cyber incidents  reassures your customer and prevents reputational damage.

Compliance

Cyber insurance shields your business against investigations and potential fines from regulatory authorities. Sidestep the costs associated with securing personal information post-breach, including legal expenses and damages in civil actions.

Financial security

Minimise financial losses resulting from cyber incidents. Cyber insurance reduces the risk of financial repercussions such as fines or liabilities that could lead to significant financial strain.

Cybercrime costs are on the rise

Cyber insurance can be challenging to find because it’s still a relatively new field, and cyber crimes are a rapidly-growing threat. The landscape of cyber threats evolves quickly, making it hard for insurers to assess risks accurately. Premiums can be high, reflecting the significant potential losses from cyber incidents.

Last year, The Big Issue, a social enterprise that supports disadvantaged people in Cape Town, lost nearly R600,000 due to a BEC incident. This financial blow threatened the organisation’s ability to operate and jeopardised the income of magazine vendors.

A cyberattack on CIPC in January exposed sensitive data of millions of companies, including ID numbers and contact information. Hackers can use this to impersonate directors to make fake purchases or send fake emails.

In April, the South African trade regulator, ITAC, was hit by a cyberattack in January that exposed stakeholders’ personal information. This highlights a growing trend of cybercrime targeting government entities in South Africa.

Investing in cyber insurance helps mitigate these risks, but it’s not the only solution.

Cut the costs

Whether you’re a heavy hitter or a small business, cyber insurance is crucial. Luckily, there are more affordable ways to protect your organisation. Awareness is key – implementing internal policies, conducting training workshops, and using cybersecurity software can significantly reduce risks.

While that may seem simple, it’s more than most organisations do.

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