The Internet of Things (IoT) is a massive part of the digital world. The internet has created countless online opportunities for business and professionals. Every company uses the internet and various digital devices for at least some part of its business process. However, with the benefits come devastating disadvantages and risks.
Every business that uses the internet or conducts any activity online can be a victim of cyber-attacks. Cyber threats are a growing concern for every business – a topic that almost every industry should take seriously. In fact, there was a 38% increase in global attacks in 2022 and possibly more in 2023.
Businesses and experts must have the right cyber defence plan regardless of their industry. The best strategy includes high-quality cyber security and cyber insurance. Both components help businesses in different ways and are equally important.
However, there is always a lack of knowledge about the difference between cyber security and cyber insurance. Hence the article will explain the difference between cyber security and cyber insurance and why they are crucial to any business.
What is Cyber Security?
Cyber security is a range of technologies, processes and strategies intended to detect, warn and prevent users and businesses from being victims of cyber-attacks. It is a form of cyber defence that helps companies to stay safe when opening emails, clicking on websites or opening files.
Cyber security software helps detect malicious threats and also removes the danger before it is too late. Many software provides cyber security and has successfully prevented disastrous attacks.
Businesses must spend appropriately on cyber security strategies, including software and employee cyber training.
Purpose of Cyber Security
Successful cyber security aims to simply prevent and deal with the most common cyber threats before they infiltrate the business server. It’s much more than just preventing cybercrime activities. It helps businesses and employees understand the importance and seriousness of cyber awareness.
The security practices and software can also avoid huge financial losses. For instance, recovering from a successful phishing attack costs an average of HKD 38 million, which can sometimes bankrupt a business.
Additionally, having adequate cyber security can be something to help promote the brand. Clients are more likely to work with businesses that are capable of keeping their data safe and understand cyber risks.
Examples of Best Cyber Security Practices
- Antivirus Software – Antivirus software helps to protect and detect unwanted threats. The software that needs to be installed on each device. It can help deal with malicious files (malware) and, when detected, removes them. Avoids malicious files spreading in the company and server.
- Employee Cyber Training – Cyber awareness among employees can prevent them from opening suspicious emails or surfing malicious websites. Training employees can increase their cyber knowledge and prevent human error leading to cyber-attacks and data breaches.
- Firewall Software – A firewall keeps attackers or external threats out and stops them from accessing the business system. It differs from antivirus software, as it is more of a filter on the website/servers rather than a device. It can block suspicious IP addresses or only allow access to devices using protected networks.
- Frequent Data Backup – Backing up data frequently can be an advantage in the event of a cyber-attack disaster. It can prevent large amounts of loss and date retrieval expenses.
What is Cyber Insurance?
Cyber insurance is a policy that helps companies financially deal with the risks and outcomes of cyber-attacks and data breaches. The insurance is the perfect safety net when cyber-attacks successfully breach company cyber security.
There are always some attacks that are too smart and personalised to be detected by softwares and trained employees. Especially with the generation of AI attacks, cyber insurance is crucial for every business to help cover the costs of recovering from a cyber-attack.
The insurance also assists businesses in dealing with the liability risks related to cyber-attacks. Companies will be liable if third-party and client data is breached and leaked to the public.
Cyber Insurance Cover
Every cyber-attack can cause financial loss, reputation loss, and interrupt business activity. Thankfully the insurance provides a diverse coverage to help deal with and recover from most cyber-attacks. Cyber insurance coverage includes:
- Third-Party Costs – The costs related to duties owed to the third party post-cyber-attack. These expenses will include informing the third party and dealing with liability claims.
- Data Recovery Expenses – High amount of funds to pay experts to recover data if possible.
- Incident Response Expenses – The costs for experts to analyse if there is an actual or suspected cyber-attack. The response also includes instructions about the actions that the company quickly need to take in case of a confirmed attack.
- Threat Removal – the costs of cyber experts removing the threat and fixing the attack damages. The experts will check all the servers, files and devices to understand where the attack came from and remove all traces.
- Financial & Business Interruption Loss – The most important cover is the costs lost due to the attack. These financial and interruption losses include ransom costs, income lost due to disruption, or even funds maliciously stolen or sent (to a fake account).
- Cyber Security Consultation Fee – After everything is back to normal, the company can opt to get expert advice to help reduce the chance of cyber-attacks from happening again.
Example of Cyber Insurance Claim
For example, an employee was sent a convincing phishing email from a cybercriminal pretending to be a partner company. The email has a link to an “invoice”, but leads to malicious malware. The malware spreads through the business server and the office WIFI network. The attacker locks all company access and the website, till the business pays a ransomware cost.
In this case, the business must contact their cyber insurance instantly or even when they suspected the clicked link is malicious. The insurance will guide the company on their actions and connect them with cyber experts. After experts remove the threat and the business is safe again, the insurance will reimburse the costs related to the cyber-attack.
Cyber-attacks could occur to any company; even huge companies like Twitter (X) and Microsoft have faced costly cyber-attacks. With insurance, cyber risks are handled efficiently and effectively.
Difference Between Cyber Security and Cyber Insurance
Cyber Security are technological or methodical strategies used to detect and prevent cyber-attacks. It is a necessary factor (especially softwares) every business must have when beginning to try their best to prevent attacks.
However, company cyber security may not detect all cyber threats and won’t be able to deal with attacks after they have occurred.
Cyber Insurance is the product that helps companies and experts when the cyber-attack has slipped pasted security. It is a necessary risk management policy to have a safety net to deal with the outcome of unpredictable attacks.
However, it is essential to understand that insurance will not stop any attacks, and the insurance will not cover companies that do not have existing cyber security measures.
Why Businesses Need Both Cyber Security & Insurance?
Cyber risks can ruin a business when it doesn’t have the proper cyber defence. Hence having quality cyber security and cyber insurance is crucial to battle even the worse cybercrimes.
Security measures and insurance together can help a company avoid common cyber threats and have a strategy to deal with them in case of an attack. When a company is prepared, they can avoid substantial financial loss and stress less, knowing they have insurance when things go wrong.
Cybercriminals are getting smarter, and attacks are getting harder to detect; for these reasons, companies need to be ready with cyber security and cyber insurance.
To Learn More about Cyber Insurance and get the best protection for your business against cyber risks, contact Red Asia Insurance.
