Cyber Threats Aren’t Always What You Think

Cyber Threats Aren’t Always What You Think

Cyber risk goes beyond hacking. Learn how insurance companies Delaware protect small businesses from hidden exposures and unexpected financial losses. When most business owners hear the words “cyber risk,” they probably think about hackers, stolen passwords, or a ransomware attack. Those are certainly part of the picture, but cyber risk can show up in less obvious ways.

A fraudulent payment request, a compromised employee account, a problem with a third-party vendor, or even an extended technology outage can create significant financial consequences for a business.

For small and mid-sized businesses, the biggest challenge may not be knowing that cyber threats exist. It is recognizing just how many parts of the business can be affected when something goes wrong.

A Cyber Incident Can Become a Business Interruption

Your business may depend on technology for nearly everything you do. Customer records may be stored electronically, employees may rely on cloud-based software, invoices may be sent and paid online, and important documents may never exist in physical form.

If those systems become unavailable, the problem quickly moves beyond the IT department.

Imagine your employees arriving Monday morning and discovering they cannot access their email, customer files, accounting software, or scheduling system. Even if no information was stolen, several hours or days without those systems could mean missed deadlines, delayed payments, canceled appointments, and lost revenue.

The longer a business depends on technology, the more important it becomes to consider what would happen if that technology suddenly became unavailable.

A Simple Email Can Lead to a Costly Mistake

Not every cyber loss involves sophisticated hacking.

Sometimes, the problem starts with an email that looks completely legitimate.

A business owner receives what appears to be an email from a vendor asking for updated payment information. An employee receives a message that appears to come from the owner requesting an urgent wire transfer. A customer receives an invoice from what looks like the company’s actual email address.

These types of schemes can be difficult to identify, particularly when the request looks consistent with a normal business transaction.

A simple verification procedure can help. For example, businesses can require employees to independently confirm changes to payment instructions or unusual financial requests before sending money.

That extra phone call may take two minutes. Recovering money after a fraudulent transfer can be considerably more difficult.

Your Vendors Can Create Risk, Too

Businesses rarely operate entirely on their own.

You may rely on an outside payroll company, IT provider, payment processor, cloud storage platform, marketing company, accounting firm, or other technology provider. These relationships can make your business more efficient, but they can also create additional points of exposure.

If a third party has access to your systems or sensitive information, a security problem on their end could potentially affect your business as well.

That does not mean every vendor needs to be eliminated or replaced. It means business owners should understand who has access to their information, what information is being shared, and what security practices those providers have in place.

The Financial Impact Can Extend Well Beyond the Initial Problem

The obvious cost of a cyber incident may be the money that was stolen or the expense of repairing a damaged system. However, the financial impact can continue long after the original incident is discovered.

Depending on the circumstances, a business may also face costs related to:

• Investigating how the incident occurred
• Restoring or recovering data
• Hiring legal professionals
• Notifying affected customers or employees
• Responding to regulatory requirements
• Managing public relations and communications
• Replacing compromised equipment or systems
• Recovering from an interruption to normal business operations

For a small business, unexpected expenses of this size can put significant pressure on cash flow.

Cyber Risk Is a Management Issue, Not Just an IT Issue

It is tempting to think cybersecurity is something that belongs to the IT person or outside technology provider. Those professionals play an important role, but business owners still need to understand the broader risk.

Who can access company financial accounts?

Who is authorized to approve payments?

What happens when an employee leaves the company?

Which vendors have access to customer information?

What would happen if your primary software system went offline for several days?

These are business-management questions as much as they are technology questions.

Having clear procedures, limiting access to sensitive information, and regularly reviewing who has access to important systems can help reduce unnecessary exposure.

Where Does Insurance Companies Delaware Fit In?

Cybersecurity measures are an important part of protecting a business, but they cannot eliminate every potential loss. Insurance can provide another layer of protection when a covered cyber event occurs.

Cyber liability insurance may help address certain expenses associated with a covered incident, including response costs, legal expenses, data restoration, notification costs, and business interruption losses, depending on the policy.

It is important not to assume that your existing general liability or property insurance automatically addresses every cyber-related loss. Coverage can vary significantly based on the policy, endorsements, limits, and exclusions.

That is why a cyber insurance review should be about more than simply asking, “Do I have cyber coverage?”

The more important question is whether the coverage makes sense for how your business actually operates.

Take a Closer Look at Your Business’s Cyber Exposure

You do not have to be a technology expert to start identifying your cyber risks.

Take a few minutes to think about the systems your business relies on, the information you collect, the vendors who have access to that information, and what would happen if your technology suddenly stopped working.

Those questions can reveal exposures that are easy to overlook during a typical insurance review.

McHugh Insurance Group works with business owners across Delaware, Pennsylvania, and New Jersey to help identify potential coverage gaps and build insurance programs around the way their businesses actually operate.

Not sure where your business stands when it comes to cyber risk? Contact McHugh Insurance Group to review your coverage.