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Small businesses are more vulnerable to cyber risks than they think

cyber liability insurance for small business, powered by Slice

Today, most companies rely on technology in order to conduct business. In fact, companies of all sizes are able to compete thanks to technology, and small businesses in particular have been able to grow and thrive online as a result.

Technology has also allowed cyber thieves to cripple operations. By 2021, cybercrime costs are expected to reach $6 trillion annually. In fact, cyber liability costs are rising across the board – the average cost of cyber breach rose from $3.62 million to $3.86 million, a 6.4 percent increase over 2017; average lost-record costs rose to $148 per (from $141) and the average size of data breaches increased 2.2 percent.

It is not just the large corporations that have experienced headline-making breaches that are at risk. While much of the focus has been on high-profile attacks of large corporations, small businesses are fast becoming the primary target for cyber thieves. In 2017 alone, 61 percent of all cyberattacks were perpetrated against small businesses.  

One reason for it is this: A surprising 90 percent of small businesses have not protected themselves against a cyber breach and 82 percent of small business owners believe they are not at risk of a cyber breach.

It is that lack of adequate security – and of concern – that is making small businesses more vulnerable than they need to be. It is also the reason why cyber thieves target them. Looking for a better chance at an easy payout, thieves have cost an average $148,000 to $177,000 per occurrence for small businesses. That kind of cost can be – and is – devastating to small businesses. Studies show that 60 percent of small businesses fail within six months of a cyberattack.

 

 

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Studies show that 60 percent of small businesses fail within six months of a cyberattack."

 

There are other reasons why cyber thieves find smaller entities appealing. Small businesses are:

  • More willing to pay ransoms
  • More inclined to have minimal (if any) cyber security measures
  • More likely to not have an active cyber response plan

Cyber thieves also know that some small businesses act as conduits into other businesses, as was the case for Target Corporation, whose outside vendors inadvertently allowed hackers into the corporation’s systems. A breach of your company’s systems could leave you liable for the breaches of your business partners’ systems.

For more guidance to boost your cyber security efforts, check out our  Small Business Cyber Attacks, Data Breaches and Other Digital Nightmares: Your Guide to Sleeping Soundly

See more about XL Catlin and Slice’s plans for creating small business cyber insurance.

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AXA XL is the P&C and specialty risk division of AXA.