Online network hacks have been gaining frequency as markets become wholly reliant on the Internet. Prevention of cyber attacks is crucial to your small business’s online security plan, but cyber liability insurance is necessary to protect your business in the event of a network breach.
Back in October, we provided useful tips and basic security information for small business and restaurant owners about the very real risk online hackers pose to an online network. Utilizing the Internet to store customer data, conduct and track transactions, market, and manage finances has become commonplace for practically every business in every market.
In response to the growing number of high-profile data breaches that have occurred in recent years – Kmart, Target, U.S. Office of Personnel Management, and popular mobile communication platform Snapchat – a surge in cyber liability insurance investment has occurred. However, high-profile cyber-attacks at high revenue firms have overshadowed the more frequent security breaches that target small businesses. While cyber liability insurance does not prevent your business from experiencing a data breach, implementing an insurance plan as part of a larger online security program can help in preventing your business from going under if you are to fall victim to a network hack. Like any new business endeavor, especially with a new insurance plan, a certain amount of capital is necessary to cover the monthly cost of protection; a merchant capital advance could be just the answer your small business needs to prevent the even greater costs that come with a data breach.
The Overall Cost of a Data Hack Could Put You Out of Business
Data breaches are a huge risk, not just for your customers’ personal and financial information (social security numbers, credit card numbers, addresses, etc.), but also can affect the assets and creditworthiness of your business. Independent business consultant Larry Alton published a blog for Hiscox Small Business Insurance discussing the financial burden a cyber-attack could present to your business:
- Business interruptions. More often than not, when a company experiences a network breach, it must close their doors to conduct a full investigation. Closures could last days or weeks, with no revenue generation.
- Security overhauls. The majority of small businesses that experience network hacks spend a great amount of time and money to update their online security infrastructure.
- Concessions to customers. Many businesses affected by data breaches will offer free credit monitoring services to their customers for a specified amount of time after the breach as a sign of goodwill.
- Bankruptcies and business closures. An extreme network breach has the potential to completely drain a company of its assets by clearing out all online accounts.
Cyber liability insurance can offer a safety net to prevent your business from disintegrating. Crucial to a comprehensive online security plan is preparation for a data breach, and while cyber liability insurance does not prevent a security breach, the protection gives your business the opportunity to stay afloat in the event of a network hack.