Cyber Security and Small Business

What Makes Cyber Security Insurance Essential for Small Business Owners?

Business owners do not have to operate global enterprises in order to reap the benefits of cyber insurance policies. As long as your company operations are largely contained within digital platforms, particularly those that connect to the internet, it doesn’t really matter if your business is as small as a hot dog cart. Cyber insurance is a great idea, and it is on track to becoming a business necessity in the 21st century.

At SynchroNet, we have been following the growth of cyber insurance with great interest because it is intrinsically tied to information security. If we lived in a world where IT security measures were still sufficient to withstand most cyber attacks, we could argue that cyber insurance would not be as necessary.

At the same time, we wouldn’t have to worry about getting cyber insurance policies for our businesses if we somehow managed to operate outside of the cyber threat space and beyond the attack surface, but we know that this is hardly the case.

Basics of Cyber Insurance for Small Businesses

Since we have already mentioned a hot dog cart as an example of a business that is not small enough to eschew cyber insurance, let’s run through a few scenarios in which a street food entrepreneur would need to be protected by cyber security insurance.

Many hot dog cart and food truck operators have taken advantage of mobile e-commerce technology in order to make themselves more convenient and attractive to customers. It is not unusual to find street food vendors who accept credit and debit card payments; they do this through Point-of-Sale (POS) systems that run on smartphones, and that often include features such as seamless customer information capture for automated marketing. This is as easy as registering with a financial technology firm such as Stripe, attaching a tiny card reader to a smartphone, and installing a mobile app.

What happens when a hot dog cart vendor loses the Stripe-enabled iPhone she uses to run her business? First of all, there will be a business interruption, which may also produce loss of income.

If the device happens to fall into the hands of someone who is able to access the Stripe app, all customer payment data is now at risk. Needless to say, all affected customers must be notified, and this may come at an additional cost to the cart operator, who is now facing a business crisis.

With a cyber insurance policy that provides first-party coverage, the cart operator in our example will have an easier time recovering from the iPhone loss, because many of the associated costs will be covered.

Now let’s say the iPhone thief uses the Stripe customer payment data to make fraudulent purchases and perhaps to take out loans; it would not be surprising to learn that some customers will file legal complaints and lawsuits. This is when the third-party coverage of a solid cyber insurance policy will prove to be extremely beneficial.

The worst-case scenario for our hot dog cart operator is that she could easily lose her entire business to the point of not being able to recover at all, but only if she does not have any cyber insurance coverage.

How Cyber Insurance Protects You

With a good policy in effect, she will have a good shot at establishing business continuity by means of minimizing losses. She may only need to replace the iPhone and Stripe card reader along with resetting her POS; the third-party coverage will take care of claims raised by customers concerned by identity theft, and first-party coverage will offset some of the revenue loss caused by the incident.

SynchroNet reminds you that cyber insurance is one piece of the information security puzzle for modern small business owners. If your business lacks adequate IT security, you may not be able to get any cyber insurance at all. Please get in touch with our office today if you wish to learn more about protecting your business from cyber attacks and losses.