Cyber risk can have a significant impact on your business if your business relies on computers in any way. Cyber losses can make you financially responsible for consumer loss and could also impact your business operations. We will explain what you can do about cyber risks.
What is cyber risk?
Cyber risk refers to the possibility of data loss or property destruction, as well as ransom demands that may result from the hacking of your IT systems. Cyber risks could cause financial losses or disrupt your business. If consumers feel that their data is not secure, they can damage your company’s reputation. Cyber risk can result in system failures or unauthorized uses of information.
Unauthorized persons can gain access to your computer system or databases and could halt your operations, steal information, or even stop your operations altogether if you don’t pay a ransom. You need the right cybersecurity.
What is the financial impact of cyber risk?
Cyber risk can have a huge impact on a company. Even a minor attack can cause a company to have to pay to replace or steal data records. With an average cost of $150 for each stolen data record, IBM research has shown that the average cost of data breaches in the United States was $8.64 Million in 2020.
Even though the losses aren’t as severe for small businesses, it could mean lost revenue due to an operating system that is down for days or even weeks. Consumers may still be wary about working with a company even after it has restored all systems. People who have recently been the victim of a cyberattack or data breach fear that their personally identifiable info (PII), is no longer secure.
Who commits cybercrimes?
Cybercriminals can come from many backgrounds. Ex-employees may commit cybercrimes to retaliate against the company that fired them. This type of crime can be prevented by revoking access to the system as soon as an employee has been terminated.
Sometimes industry competitors will attack your business and try to make it look bad. Some activist groups believe that hacking and causing harm to certain businesses is a way to help society.
Security risks can simply be caused by mistakes made by employees, particularly if they work for companies with poor policies or training. One prime example was in 2016 when Hillary Clinton’s campaign was hit with a huge phishing attack and many workers fell for it.
Cybercrimes are still majority committed by hackers who seek to make a profit through hacking. This includes selling data via the dark web, demanding large ransoms, or funneling credit card transactions into a third-party account they control.
What is the type of cyber risks?
Cyber risk is not just about external threats from bad actors. Businesses must deal with any internal threats that could compromise data and systems. Both are important.
Internal cyber risks
Employers want employees to be trustworthy. However, there are types of cyber risks. These can be caused by former employees or employees who have access to systems and are able to use that access in an adversarial manner.
These are common cyber-risks within the organization:
- Employee sabotage and theft: This could be a former or current employee who accessed systems to gain information that would harm the company. While some information can be used to poach employees and other information could cause harm to the company by revealing private information in public forums, it is possible for some information to be used to hurt the company.
- Unauthorized access: Employees may gain access to systems that they should not have. They could change the permissions or disable network security tools.
- Unsafe business practices: If network servers are left unlocked rooms or users are not properly logging off of devices, Businesses are vulnerable to attacks.
- Accidental loss or disclosure: Unwittingly, employees may reveal information. It could happen by adding an unauthorized person to a confidential email chain, or by leaving a company laptop in a coffee shop.
External cyber risks
External cyber risks are often the most serious concern for businesses. Bad actors may attempt to illegally access data or stop business operations. It can be difficult to identify where external cyber threats originate.
These are just a few of the common cyber-risks that exist outside.
- Malware attacks: These viruses can infect your system and execute unauthorized activities.
- Phishing Schemes: Nefarious people send false messages to employees so they click on them and reveal personal or proprietary information, such as passwords or payment details.
- Malvertising: This malware redirects users to malicious sites. A publisher’s website hosts code that extracts user data for further targeting.
- DDoS attacks: An attack that causes a disruption in the normal traffic to a website is called DDoS (distributed denial-of-service). This malware is where a botnet overtakes your website and blocks consumers from using it.
- Ransomware: This malware locks down system operations and renders websites unusable until payment is made. As insurance companies realize that ransomware is cheaper than remediating an attack, this is becoming more common.
Ransomware attacked the Colonial Pipeline in 2021. This pipeline is responsible for supplying oil to the Southeastern U.S. DarkSide, a Russian criminal group, that is believed to have orchestrated this attack. The group was able to trigger panic over a possible gas shortage by shutting down the pipeline. DarkSide received a ransom in bitcoin of $2.3 million.
How to reduce your business cyber risks
A plan is your best defense against cyber threats. Although you cannot prevent all cybercrimes, there are many things you can do to ensure that your company is safe. Here are nine ways you can reduce the cyber risk of your company:
- Keep your computer systems up-to-date and your security software updated. This can allow malware to infiltrate your system. To prevent gaps from developing, make sure you have the latest antivirus software installed and keep your operating system up-to-date.
- Protect outbound data. Many business owners do not protect their data from being accessed. To prevent employees from accidentally releasing sensitive data, you should also protect data going out.
- Train your employees. Your employees should be aware of security risks and how they can be avoided. This is especially important for phishing schemes, which may be received from gullible employees who aren’t trained to avoid clicking on links.
- Develop strong passwords. Make complex passwords that are impossible to guess. Your system administrator’s password should be different from that of the server. Hackers won’t be able to gain access to the whole server if you don’t make it more difficult.
- Encrypt data. Encrypt data when you send it or store it. Encrypting data means it isn’t stored in normal text formats.
- Limit login attempts. Hackers will continue to use bots for password cracking. Limiting the number of login attempts to access servers or data systems can prevent them.
- Implement a kill switch. A kill switch is a device that allows IT professionals to close down servers and take websites offline in the event of a threat. This allows you to respond quickly to the threat and prevent it from causing any further damage.
- Don’t store credit card information. You don’t want hackers to get your customers’ credit card information. This information should never be stored in any database you have, and your employees must follow strict policies to prevent them from doing it.
- Back up your data regularly. Regular data backups are a must. If you are ever attacked by hackers, this will make it much easier to restore your data.
Also read: 10 Best Cyber Threat Intelligence Tools
How cyber liability insurance can help
Cyber liability insurance is a smart idea since you cannot predict when or if a cyberattack might occur. A Cyber Liability Policy will cover financial losses resulting from:
- Costs of business interruption
- Ransom demands
- Investigating the attack
- A PR company to handle the fallout
- Fines for violations of regulations
- Notification costs for custom notifications (which can vary from 50c to $5 per person)
- Credit monitoring for consumers (which can cost between $10 and $30 per person)
- Legal defense and any settlements
Many insurance companies have cyber loss teams that can help with damages and losses. This will allow a company to quickly recover from losses They use their own internal teams to stop the spread of malware and viruses, with the aim of minimizing the overall loss for both the business and the insurer.
How can you be penalized for cyberattacks?
The Federal Trade Commission has been charged with protecting America’s consumers. Every business owner is responsible for ensuring that consumers’ data is secure. If it’s not, You could be held responsible and face fines or even jail time in extreme cases.
The FTC suggests business owners evaluate the information they have and keep. It also recommends that they lock any data electronically or physically. You can either shred the information or use a data-deletion tool to get rid of it.
A business must deal with more than the FTC fines in the event that there is a data breach. These additional penalties could be imposed on you.
- Fair and Accurate Credit Transaction (FACTA), fines up to $2,500 per violation at the federal level and up $1,000 at the state level
- For each violation, civil penalties up to $3500
- HIPAA penalties of up to $50,000 for erroneous disclosures and up to $50,000 for criminal wrongful disclosures can be imposed.
These are only a few penalties that businesses could face for a data breach. These fines are not affordable for small businesses. A data breach could result in them losing 20%-30% of their customer base. In the digital age, it is crucial to keep consumer data private and have insurance to protect against financial loss.