Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our content.
How does cyber insurance cover cyber risks?
Know which cyberattacks your business is most at risk for.
Nearly every business faces cyber risk because the business, its service providers and employees all connect to the Internet. Risk can come from outside hackers or from internal errors or attacks. Understand the types of cyberattacks to watch out for and know the possible outcomes so your business can prepare ahead of time.
What is cyber risk?
Cyber risk is an organization’s potential for loss or damage through its technical systems or through the use of technology inside the organization. This loss takes many forms, from a hacker draining a bank account to an employee accidentally exposing private information to website visitors.
To protect against those risks, businesses should watch out for internal and external attacks, including:
- External attacks. This kind of attack comes from outside the company and involves deliberate action to steal money or information. The attacker may hack your databases or overload and shut down critical equipment.
- Malicious insider. This attack involves deliberate steps to sabotage a company or steal information from the inside. The person could be a financially motivated employee installing a virus on computers.
- Internal error. Employees pose cyber risks when they make an error. They might disable a firewall, forget to encrypt information, click a malicious link or give out sensitive details to a seemingly reputable person.
- Programming and systems error. This accidental breach happens when an employee or company overlooks a system error that exposes information. The risk can also happen when an outsider such as a customer accidentally taps into a system, exposing a system’s weakness.
What are the biggest cyber threats?
Attackers use a variety of methods to access the information they want. While nearly all kinds of cyber attacks are on the rise, some of the most common ones include:
Ransomware is software planted in a company’s system to block employees from accessing important information. Attackers then demand a ransom to restore access, often requesting payment in cryptocurrency. However, the attackers may or may not restore access, and any information restored is still compromised.
This threat is growing, especially since some cybercriminals sell ransomware kits for people with less computer skill to use.
Hacking refers to any attempt to access or compromise electronic systems, including the company’s website, customer information databases, employee computers or even smartphones. This type of attack may refer to the more manual process of an individual hacker breaching a system.
A shortened term for malicious software, malware is installed on a computer system and used to access data or sensitive information without the company’s knowledge.
4. Malicious code
Malicious code is a code or link that contains harmful files or programs. The code infects through downloadable or attachment files, while visiting infected websites or in links sent through email, social media or text messages.
5. Social engineering or phishing
Phishing refers to an attack in which the criminal poses as a credible company to gain personal information. Attackers may use official letterhead in emails, sophisticated websites or phone calls to make the inquiry seem official. In some cases, the attacker may pose as a trusted individual from the company, so it’s important to investigate any cases of coworkers asking for sensitive information online.
6. Denial of service attacks
This type of attack happens when employees can’t access normal computer systems because of a system overload caused by cybercriminals. Attackers flood the company’s system with traffic until it can no longer handle the load, leading to financial loss for your company. Attackers may use the opportunity to access information from this system or to draw attention away from the actual system being attacked.
7. Outsourced company access
Companies that use outsourced services may increase cyber risk by giving these companies access to networks and data. If cybercriminals can compromise the service provider, they may find a back door into a main company’s system and sensitive information.
8. Stolen or hacked employee devices
While protecting employees’ computers may stand at the top of the company’s security list, other devices may not have the same level of protection. For example, hackers may target an employee’s smartphone in hopes of accessing their email or finding sensitive information accidentally left unprotected. Stolen employee computers and devices can also compromise information.
9. Malicious botnets
A botnet refers to multiple computers or systems that coordinate a task together. While botnets can be used for website maintenance or other nonharmful purposes, attackers use them to coordinate a cyberattack like a denial of service, email spamming or malicious popup ads.
What are the consequences of cyberattacks?
Cyberattacks can result in many different outcomes, depending on the attacker’s goal. Some of the consequences include:
- Loss of confidential data or intellectual property
- Loss of customers because of a data breach or bad press
- Breach of contract
- Network security liability
- Fines for company negligence
- Extortion and blackmail
- Financial loss from theft
- Business interruption
- Product recalls
- Lower share value
- Property damage to computer systems
Who is responsible for managing cyber risk in a business?
Companies give much of the cyber responsibility to IT staff and heads of the business. However, staff members outside of technology departments can influence cyber risk too. Staff members may need training to spot and shy away from suspicious inquiries and to safeguard the company’s password protection.
Some of the people directly responsible for cybersecurity may include:
- Chief information officer or information security officer
- Chief technical officer
- Chief risk officer
- IT or security staff
Compare cyber insurance
Your business may face a variety of cyber risks from outside and inside your company. If a cyberattack happens, you could suffer lost data or customer information, financial losses and negative media. While prevention may be your first defense, many business insurance policies do cover cyber liability to help you recover when a cyberattack happens.
Frequently asked questions about cyber risk
More guides on Finder
How much does pet insurance cost for different dog breeds?
Track down your dog’s insurance cost and learn which characteristics play into your pup’s health risks.
What is the PPP Second Draw loan and how does it work?
The HEALS Act would establish a second PPP loan program if passed. Only hard-hit small businesses would qualify but more costs would be forgivable.
Essential insurance for schools during the coronavirus
Find out how schools can protect themselves against COVID-19 liability claims ahead of the new school year.
Does my business insurance protect me from vandalism and looting?
Your business insurance policy should pay for vandalism and looting — but you’ll need to document the damage.
Does cyber insurance cover the coronavirus?
Learn how your cyber risks might change during the coronavirus and how insurance covers you.
Can business insurance help during the coronavirus?
Find out which types of business insurance are most likely to pay out for coronavirus claims.
How does coronavirus affect car insurance?
The virus won’t change coverage, but it could affect claims and communication with your insurance company.
What does home insurance cover?
Find the home insurance coverage you need to build the perfect policy for your nest.
Chubb business insurance review Mar 2021
One of the largest US commercial insurers, Chubb prides itself on customizing wide coverage for many business sizes and risks.
Compare small business insurance
You’ll likely benefit from a business owner’s policy, plus you may need other coverage.
Ask an Expert