Cyber breaches happen only to big corporations. Small business owners are equally, if not more, at risk. The key to guarding against information theft, loss of money, and damage to reputation is a good cyber security policy. Insurance can accompany it and act as an insurance policy you never hope to have to use, but will be thankful you can.
So let’s go through what you need to verify, what types of risks small businesses are encountering, and how insurance comes into play.
Why Small Businesses Are Targets
- Australian Cyber Security Centre (ACSC) reports that on average, small businesses lose an estimated $49,600 per cybercrime attack.
- Most small businesses allocate less for cybersecurity and therefore have gaps in defense.
- Threats generally assume small businesses have weaker security and more accessible entry points (old software, weak password habits, unsecured systems).
Top Threats Small Businesses Need to Guard Against
- Ransomware – Attackers encrypt data and ask for money.
- Phishing & Social Engineering – Tricks that trick employees into giving up passwords or access.
- Business Email Compromise – Spoofed business emails are posing to come from reputable sources.
- Unpatched or Misconfigured Systems – Current software or computers are easy targets.
- Data Breach / Loss of Confidential Information – Disclosure or loss of customer or employee information can translate to regulatory penalties.
Checklist: Before a Breach Happens
To minimize damage and have insurance cover you, cross these off now:
- Have a written cyber security policy that states how you guard information, what your employees should do with credentials, and what to do during an incident.
- Make training of staff routine. Educate them on phishing detection, password creation, strong/multi-factor, and policy compliance.
- Keep equipment current. That includes patching, secure settings and uninstalling outdated, unused software.
- Limit access. Grant only to each worker access to the information and systems they require.
- Do security awareness training: phishing, password hygiene, recognizing suspicious links and secure use of company equipment. Develop guidance for treating information and reporting incidents.
- Back up your data and store backups off line or off site.
- Inspect your systems. Use logging and alerts for unusual activity. Know what “normal” looks like to spot abnormal ahead of time.
When Insurance Becomes Essential
Insurance is not an afterthought; it is a component of a comprehensive risk management plan. These are the times when you actually do need to have coverage:
- If you hold or store personal data (customer, employee, supplier information).
- If you deliver services or goods based on digital infrastructure.
- When contracts require it (occasionally, customers, suppliers or regulators insist on cyber insurance).
- If you’ve had an incident before you know you’re vulnerable.
- When your digital value grows (more data, more transactions, more online presence).
What Good Cyber Insurance Should Cover
Make sure any policy you consider includes:
- Legal costs for responding to incidents.
- Costs of investigating and containing breaches.
- If you’ve experienced a previous incident, you know you’re exposed.
- Liability for customer data being compromised.
- Notification costs (let customers or authorities know).
- Business interruption losses (if you can’t operate while investigating/repairing).
Insurance Doesn’t Replace Security, It Complements It
The best cover will be useless if there is insufficient security. Insurers will generally adjust premiums or pay claims according to your risk position. If your systems are poorly maintained or employees are poorly trained, they can refuse to cover you, hike premiums, or restrict coverage.
Real-World Cost Context from Australia
The 2023-24 Annual Cyber Threat Report estimates more than 36,700 Australian Cyber Security Hotline calls demonstrating increasing incidents and demand for support.
These statistics identify that even modest, regional attacks can have tangible costs.
Steps to Prepare Now
- Audit and revise your cybersecurity policy.
- Select insurance proportionate to your risk level and size of your business.
- Practice responding to an incident so all personnel know what to do if things fail.
- Maintain monitoring and backups. Don’t wait for breach to reveal vulnerabilities.
- Regularly review your IT infrastructure, secure devices and audit access.
Conclusion
Every small business has something to lose in cyber breach. Data, money, trust all are vulnerable. Insurance is not luxury but necessity when paired with strong security practices.
Take charge of your cyber risk today to confidently focus on growing your business tomorrow.
