Think your small business is too tiny to get hacked? Think again. While it’s usually the cyber hacks at big organizations like Target, Home Depot and the IRS that capture the headlines, small businesses are uniquely vulnerable to cyber crime. Why? Startups and small businesses tend to have less complex cyber security defenses, lax password guidelines and fewer risk management controls than more complex organizations. As a result, they’re often seen as low hanging fruit for scheming cyber criminals. The cost of resolving a data breach are daunting, no matter the size of a business. In 2014, the average post data breach costs were $1.6 million. Luckily, you can mitigate potential losses from a hack with cyber liability insurance.
Cyber security experts agree that if you run an e-commerce business or in any way retain sensitive customer information, you could be the target of a hack, and equally as bad, a lawsuit from your clients. Here are four things you can do to protect your business from the damaging effects of a cyber attack.
1. Get cyber insurance
Cyber insurance is a great complement to a general liability insurance policy, which virtually all small businesses should have to protect from claims of bodily injury in the course of business operations.
As anyone who’s ever gotten a virus on their computer knows, it’s tough to stay a step ahead of the hackers. No business is immune and cyber criminals are becoming more sophisticated every day. Sometimes even the most stringent security processes aren’t enough. Make sure your business insurance coverage includes cyber liability insurance so that your business will not suffer financially if you have a breach.
The costs associated with a data breach are high, even if the data that is compromised is never used for malicious intent. As the caretaker of the data, you are responsible for the cost to notify any affected parties that their data may have been breached. You may also be responsible for providing credit monitoring to any affected parties, and for the costs associated with any identity theft stemming from the stolen data.
One so called ‘soft’ cost of a data breach is the loss of goodwill for your business. If your customers trust you with their personal information and that trust is compromised, you could lose business because of it. It can be expensive to earn that trust back.
All of these costs could be covered by cyber insurance for small business. This coverage is becoming more critical as hacks become more prevalent and more sophisticated. Many people believe that their business liability policy includes cyber coverage, but it may not. Check with your insurance agent or carrier to make sure that you have this important protection.
2. Secure your data
Virtually all businesses have to keep some kind of customer and employee data that may be sensitive. This can include credit card numbers, social security numbers, medical information, even just names and addresses. Make sure that both physical and digital data in your care is secured.
• Paper files should be stored in a safe, or a locked cabinet or drawer. The same is true for any removable storage device like a thumb drive, CD or backup drive.
• Access to customer data, whether physical or virtual, should be restricted to those who have a need to use it. Do a periodic review of who has access to customer and employee data and why.
• Dispose of sensitive information you no longer need in a secure way. Shred paper files, and make sure that digitized information is permanently eliminated from all devices.
3. Secure your systems
Passwords are the first line of defense against cyber attacks. The more secure you can make your passwords, the more immune you are. Make sure passwords are complex, with a combination of numbers, upper and lower case letters, and special characters. Passwords should be changed at least every 90 days and never shared or written down.
Multi-factor authentication is becoming more prevalent as an extra layer of security. This is a system that requires a user to enter more than one factor to gain access to a system. It may be a separate password that changes frequently and is accessed from a separate device like a smartphone, or it may be a series of questions that must be answered to gain entry.
Some systems use fingerprint or retinal identification to ensure that only authorized people can access their data. These systems are expensive to implement, so they are currently used primarily by large corporations and government agencies for extremely sensitive information. As they become more common, costs will likely decline and they may become a standard for businesses of any size.
Make sure your network is secure as well. You should have a firewall, and make sure all virtual private networks (VPNs) and wifi are secure. Keep all software and operating systems on networks and devices up to date.
4. Educate yourself and your staff
The human element may be the single most effective way to prevent a cyber attack, since it’s the only one that hackers cannot overcome with malicious code. Make sure your staff understands the importance of maintaining secure passwords and protecting both paper and electronic records.
Educate your staff about phishing and business email compromise (BEC) schemes. Both of these schemes involve bogus emails that appear to come from a company or person familiar to the victim, requesting that sensitive information be provided or ‘confirmed’ or that money be transferred to a third party.
A BEC scheme often targets those businesses that commonly use wire transfer as a way to collect from customers or pay vendors. The perpetrator may create an email that appears to come from the company president or CFO, requesting that the accountant or bookkeeper transfer money to the account of a supplier. The account, of course, does not belong to the supplier at all, but to the fraudster. Make sure that you have controls in place so that any requests, even if they appear to come from you or another executive, are verified.
Want more information cyber breaches? Check out Hiscox Cyber 101.