E-commerce Business Cyber Risks to Be Aware of
- Adit Bhatnagar
- Feb 7, 2024
- 4 min read
E-commerce is the buying and selling of products or services online. As the Internet plays a huge part in e-commerce success, it can also be the downfall due to cyber risks. Cyber risks in the e-commerce industry are a major concern for existing and new e-commerce companies.
The article will highlight the top e-commerce business cyber risks and explain how to avoid and deal with these cyber threats.
What is Cyber Insurance?
Cyber-attacks are the biggest threats an e-commerce business can face. The main purpose of cyber-attacks is to steal data and financially exploit businesses. One of the only ways to deal with cyber-attacks, economically and professionally, is to purchase cyber insurance.
Cyber insurance is the final defence against attacks that helps companies deal with attacks and recover without substantial financial loss. The insurance will cover cyber experts’ advice, threat removal, data recovery, third-party communication, ransom costs and financial loss.
It is important to have cyber insurance, but the insurance will not prevent any attacks. The best way to avoid attacks is to understand e-commerce business cyber risks and have adequate risk management.
Top E-commerce Business Cyber Risks
Lack of Cybersecurity
E-commerce businesses rely on the Internet for products and services, collecting and storing vast amounts of customer data online. Cybercriminals target these platforms, which face 32% of global cyberattacks. The greatest risk is companies with poor cybersecurity.
Companies must secure their data with cybersecurity measures, including software, firewalls, access management, data backup, and cyber awareness. Proper cybersecurity helps detect, prevent, and analyse attacks, serving as the first defence against online risks. Cyber insurance also requires existing cybersecurity defences.
Rise in Ransomware
Data, website, and company networks are vital for operational success. E-commerce firms rely on their websites to serve customers and manage data for online products or services. However, rising cyber risks, especially ransomware attacks– malware that locks networks, data, and websites until a ransom is paid—pose a significant threat.
Cybercriminals exploit vulnerable companies desperate to regain control of their data and business operations. The ransom is always a large amount and is calculated depending on the business. Cybercriminals are smarter than ever now, and companies must be prepared.
The best way to prevent or deal with ransomware is with cybersecurity, awareness and cyber insurance. Companies must instantly inform their insurance provider if they believe they have been attacked and avoid taking action without expert advice.
Use of Artificial Intelligence in Attacks
AI attacks have made cyber-attacks much stronger, more dangerous and more convincing. Examples of AI cyber-attacks include AI phishing emails, fake calls, deepfake pictures & videos and more.
There was a case in Hong Kong where AI criminals created a deepfake conference call with an employee, which resulted in the transfer of USD 26 million, as the deepfake manager requested.
Cybercriminals are using AI to construct and execute very convincing personal cyber-attacks. The e-commerce business cyber risk has made it harder to detect attacks and trust emails. The best way to avoid such attacks is to doubt anything and everything that seems suspicious.
Employee Errors
Employee error is a common e-commerce business cyber risk that can lead to disastrous outcomes. Employee almost never mean to allow malicious softwares into their business, but mistakes happen.
The error could occur when an employee opens a phishing email, clicks on links, downloads malicious files, surfs malicious websites or ignores cybersecurity warnings. E-commerce companies must train their employees to understand cyber risks and how to detect them.
Cybersecurity awareness training can help the workforce understand cyberattacks and reduce the risk of cyberattacks. Employees should be able to question and point out suspicious, malicious emails and websites.
Work From Home Risks
Employees may sometimes work in cafes and public areas when a company follows a work-from-home (WFH) protocol. Employees using public Wi-Fi increase the risk of man-in-the-middle attacks and unauthorised access.
Aman-in-the-middle (MITM) attack is an attack in which the cybercriminal hides in the middle of the user and the application. The position is taken by creating fake Wi-Fi networks or hacking public Wi-Fi networks. Hence, the attacker will observe, record and maliciously use all sensitive data inputted.
The e-commerce business cyber risk can provide cybercriminals with network logins and enable a data breach. E-commerce businesses should enforce regulations when employees work from home and ensure they use encrypted private WIFI.
Why Insurance Is Crucial to Deal with E-Commerce Business Cyber Risks?
All the mentioned e-commerce business cyber risks can ruin the business and its reputation. Dealing with cyber-attacks can be extremely expensive and complicated. Therefore, having cyber insurance for every e-commerce site is essential.
Cyber insurance will help companies recover from even the worst cyber-attacks with reduced financial loss. Financial coverage is vital to recovery, which also covers expert advice and services. As mentioned, no company should take action against cyber-attacks without expert help.
In addition, peace of mind allows e-commerce businesses to focus on selling their product or services online without stressing about every click.
Every company that uses the Internet should understand the cyber risks associated with e-commerce and be prepared with cyber insurance.
E-commerce Business Cyber Risks FAQ Section
How can e-commerce businesses assess their cyber risk exposure?
E-commerce businesses can assess their cyber risk exposure by conducting regular security audits, identifying vulnerable areas in their systems, and evaluating the types of data they collect and store. Hiring cybersecurity experts to perform penetration testing and risk assessments can also provide valuable insights.
Will cyber insurance cover data breaches caused by employee mistakes?
Yes, most cyber insurance policies typically cover data breaches resulting from employee errors, including unintentional exposure of sensitive information. However, coverage specifics can vary, so it is important for businesses to thoroughly review their policy details.
How quickly should a company report a cyber incident to its insurer?
E-commerce businesses should report a cyber incident to their insurer as soon as they become aware of it, ideally within 24 hours. Prompt notification can help ensure timely support and maximise coverage for any resulting losses.
To learn more about cyber insurance and cover e-commerce business cyber risks, contact Red Asia Insurance.
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