Does your Business Need Cyber Insurance in Canada?
In today’s digital age, businesses face an inevitable threat – cyber attacks. The constant occurrence of cyber invasions makes it crucial for businesses to stay ahead of the curve when it comes to protecting their digital space. Cybercriminals are targeting businesses of all sizes, with smaller businesses being particularly vulnerable due to limited resources and less awareness of cyber dangers.
During the COVID-19 pandemic, an unprecedented security threat emerged as people began to work from home. This remote environment led businesses to allow employees remote access to their servers, exposing them to attacks from methods such as trojan horses and phishing. At the Cybertech Europe 2022 conference in Rome, Alessandro Profumo said cybercrime costs the US 2021 six trillion dollars. As a result, cyber insurance has become a necessity for businesses in Canada.
Fraudulent activities and scams are expected to be the prevailing type of cybercrime Canadians encounter in the coming two years. According to the National Cyber Threat Assessment, cybercriminals aim to pilfer personal, financial, and business data through the Internet.
Cybersecurity is much more than an IT issue; it is a business concern that affects all levels of an organization. – Stephane Nappo
What is Cyber Insurance Coverage?
Cyber has become a rather ambiguous term in today’s data age. Cyber insurance coverage is designed to protect businesses from the financial losses and liabilities associated with cyber attacks. When we reference cyber, we refer to your computer, electronics, network, data processing and transferring, for example. Cyber risks can include data breaches, privacy breaches, and/or computer attacks. Our reliance on digital devices has left businesses vulnerable as we continue using shared cloud computing networks such as OneDrive to stay interconnected with clients or co-workers. Data is a lucrative commodity for criminals because of its value to a business, and using phishing attacks is an easy way to steal. Typically, the main causes of a data breach are malicious attacks, security system glitches, and human error.
According to the Canadian Anti-Fraud Centre, there have been more than 150,000 instances of fraud in Canada since January 2021, resulting in a loss of over $600 million.
Why Cyber Security Is In Demand
The cost of putting the pieces together after a data breach can devastate any business, but particularly small businesses. As the owner, you may also be liable to customers and other businesses and have to pay restitution. Notification costs to clients and other companies, such as third-party vendors, can add to the expense. A standard business insurance policy doesn’t cover cyber risk traditionally. However, some policies offer cyber risk or cyber security coverage as an add-on. In other cases, a standalone cyber risk policy may be a better way to protect your business.
1. Liability Coverage
In the event of a cyber attack, your business may be held liable for damages caused to customers or other networks and computers. Cyber liability coverage protects your business’s reputation and ensures you can fulfill your obligations to affected parties. Cyber insurance can provide coverage for the following:
- Legal defence costs
- Settlement costs
- Damage to other networks or computers.
2. Data Recovery and Business Interruption
A cyber attack can result in the loss or compromise of critical business data, leading to disruptions in operations. Cyber insurance can cover the costs associated with data recovery and business interruption, allowing your business to minimize downtime and quickly get back on track.
3. Cyber Extortion
Cybercriminals often engage in extortion tactics, such as ransomware attacks, where they demand a ransom to release encrypted data or restore access to systems. Cyber insurance can provide coverage for cyber extortion, offering financial assistance in dealing with these situations and minimizing the impact on your business.
How to Protect Your Business
The cyber threat landscape in Canada is constantly changing and evolving. Canadians increasingly rely on the Internet for various tasks, expanding the potential targets for cyber threats. Cybercriminals constantly adapt their tactics and leverage new technologies to achieve their financial, geopolitical, or ideological objectives. While awareness and best practices in cyber security can help mitigate many cyber threats, it’s important to recognize that these threats are successful because they exploit deeply ingrained human behaviours and social patterns, not just technological vulnerabilities.
Ask your broker about adding cyber security to your policy. While many businesses are similar within the same industry, your business is unique. Having a broker help you review your security measures and determine your unique exposures will give you the peace of mind that you are protected if the worst occurs. Together, you can build a customized solution that protects your business and fits your budget. The first step in protecting your business is to have a candid conversation.
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