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The importance of cyber insurance: Santam

The importance of cyber insurance: Santam
25-08-22 / Tommy Jackson

The importance of cyber insurance: Santam

Cape Town -  In today's digital world, all organisations, big or small, including SMEs, are at risk of a cyberattack. Last year, South Africa had the third highest number of cybercrime victims in the world resulting in losses of R2.2 billion. The rise of hybrid work and remote work has made companies more vulnerable than ever; this is especially true for businesses as they have the responsibility to protect their customers. The question is, who protects the businesses? This is what makes cybercrime insurance a vital component in any business's risk mitigation strategies.

Philippa Wild, Head: Commercial Underwriting from Santam says, "With the world changing in the way it is, it is important that companies stay ready for what lies ahead. One great advantage of having cyber insurance is that it enables a business to bounce back from any business interruptions and financial loss incurred because of cybercrime. Cyber insurance also helps with the practical side of getting IT experts to restore systems, recreate data and pre-empt new threats."

Outsmarting Cybercriminals

Cybercriminals are constantly inventing new and creative ways to bypass firewalls, anti-virus protections and outdated software in their attempts to outwit IT professionals. Businesses, irrespective of company size, should familiarise themselves with the most common techniques used. These include:

  • Phishing:When a person is targeted via email, phone, or text by someone posing as a legitimate (and often known) institution or individual to obtain personal information like credit card details or passwords. These emails often look like they come from a trusted source but with subtle differences like small spelling errors or unusual email addresses.
  •  Ransomware:Involves encrypting all the data on a company's hard drives and servers and demanding a ransom in exchange for its return. Most recently, credit reporting agency TransUnion fell victim to a ransomware attack where the hackers demanded roughly R225 million.

Who Should be Concerned About Cybercrime?

The advancement of technology and remote work has left many people vulnerable to crimes like hacking, data theft and damage, and even industrial espionage. In short, everyone must be concerned about cybercrime. These are some of the most affected industries:

  • Small Businesses: Because they simply do not have enough resources to invest in adequate security measures, small businesses are at greater risk of phishing and malware attacks.
  • Healthcare Sector: Since the COVID-19 pandemic began, this industry has seen a spike in denial of service and ransomware attacks. These can be especially costly as businesses in this industry are often extorted for large ransoms to resume their life saving services.
  • Financial Institutions: Thanks to the proliferation of mobile banking apps, financial institutions are at greater risk of cybercrime such as server attacks and data theft where hackers use malicious code to infiltrate servers and steal financial information and money.
  • Online Education: Thanks to the increased use of various technologies, this sector is experiencing spikes in spam and phishing attacks.

The Implications and Risks of not Having Cyber Insurance

The average small business hack attack can cost your company anywhere between R50 000 to R250 000 and will require you to manage POPI regulations, keep employees updated on proper digital hygiene and constantly back up your data. Furthermore, if your business possesses or has experienced any of the following, you are at risk of cyberattacks and need cyber insurance:

  • Your Business Stores Credit-Card Data: You could be exposed to security breaches in terms of your customer's confidential information, running the risk of liabilities occurring from breach of their privacy.
  • Your Business Stores or Processes Sensitive Third-Party Data: You could have contractual liability if third-party data is leaked, in addition to harming the brand's reputation.
  • Your Business Uses a Transactional and Interactive Website/E-commerce Platform: This means you could face regulatory penalties if a breach were to occur.
  • Your Business Uses a Cloud Service Provider to Store Sensitive Information: You could be held accountable for any information lost during a breach of the system.

The Importance of Being Protected:

It is vital to have the right cybercrime insurance cover in place. Having adequate cover combines risk management services and insurance to cover business interruption costs, ransomware, forensic costs and whatever else your business may need. Equip yourself as a business and protect and empower your people with the peace of mind that comes from cyber insurance.

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