The Internet is both a bane and a boon - allowing us to perform an array of tasks at the click of a button, but at the same time, putting us at a constant risk for cyber attacks. Most people can never tell when an otherwise legitimate looking email or text turns out to be the garb for an underlying scam, meant to victimise them and steal their data and money! Whether the entity is an individual or a business, cyber insurance is rather vital for financial protection against this rising number of cyber attacks.
There’s this huge misconception that only large corporations require business insurance, but it is totally untrue. Cyber attackers do not discriminate amongst companies based on their scale of operations, which implies that even small, micro, and medium enterprises have this threat looming over their heads. In fact, there are many real-life instances in which MSMEs have borne the brunt of phishing scams, malware attacks, payment frauds, ransomware attacks and a lot more.
As MSMEs are growing rapidly across India, their cyber risk vulnerability is also increasing proportionately - which necessitates the need for corporate cyber insurance.
The Susceptibility of MSMEs to Cyber Crimes
Micro, small and medium enterprises contribute almost 28 to 30% to the nation’s GDP. While these businesses employ a huge number of people, they are different from big companies - in the sense that the operational procedures and systems of the former category are not as robust as those of the latter one. MSMEs often lack the funds to put systems in place to prevent cyber attacks, thus making them easy targets for potential cyber crimes. Besides, many are not even aware of cyber risks and the measures that can be taken to safeguard their company.
After-Effects of Cyber Attacks on MSMEs
Loss of data
All organisations store data about their customers / clients for business purposes. This information is extremely confidential; so in the event that a cyber attack occurs, it can cause a massive breach and loss of this sensitive data. This can negatively impact the MSME company’s reputation and may even make it lose its precious customers.
Financial losses
The most harrowing effect of any cyber attack on an MSME is the financial loss it can trigger. Theft of data and intellectual property can have serious financial implications, which may even be so extensive as to lead to the shut-down of the business or make it bankrupt. These financial losses can be implicit or explicit. Some of them are listed as under:
Technical investigation expenses
Customer protection post-data breach
Cost of regulatory compliance
Litigation and attorney costs
Cybersecurity enhancement expenses
Rise in cyber insurance premium
Rise in cost when increasing debt, etc.
In the event of data loss due to a breach incident, the MSME business will be held accountable. This is because a cyber attack is indicative of a company’s failure to enforce a strong cybersecurity system for the protection of data. It paves the way for fines and penalties slapped on them by regulatory authorities. Plus, if clients decide to take legal action against the business, then it can cause more losses. That’s why business insurance coverage like cyber insurance is absolutely essential for MSMEs!
Important Coverages an MSME Can Avail Through Cyber Insurance
A corporate cyber insurance policy shields MSMEs from first and third-party costs associated with data breaches. It helps in risk mitigation, thus aiding in recovery and resumption of business operations. Following are the different inclusions under this coverage:
Fines that must be paid to regulators
Legal and administrative expenditures
Defence costs to cover data loss liabilities
PR expenses for company’s reputation rebuilding
Legal costs for affected clients
Cyber extortion or ransom costs
Charges of IT forensic experts
Business interruption expenses
Data recovery costs to recollect, replace, and restore lost data
Whether it’s an MSME or a large corporation, there’s no denying that cyber insurance is crucial for all, as nowadays every business utilises the internet in its day-to-day dealings. Raghnall, the nation’s trusted insurance broker, offers exceptional cyber insurance solutions for MSMEs. Contact our experts right away for more details!
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