Most Small Businesses (51%) Not Investing in Cyber Risk Mitigation

Cyber Insurance

A number of reports from leading cyber security companies indicated a rise in threats between 2015 and 2016. The 2016 Ponemon Cost of Data Breach Study found the average total cost associated with a data breach also increased, from $3.8 million to $4 million per event.

If Yahoo is any example, it’s nearly impossible for even the largest companies to keep their records safe, particularly when hackers are capable of using increasingly creative methods to steal data. Even with that threat, a large number of small businesses are not allocating funds to protect against these threats. Small Business Trends reports that 51 percent of small businesses are not actually investing in risk mitigation.

Furthermore, when a company invests in cyber security, that investment often goes toward preventing external risks. However, 55 percent of all cyber attacks come from the inside, with 23.5 percent the result of employees who fail to follow proper security procedures or accidentally leave the company’s systems vulnerable to attack.

Considering that 60 percent of small businesses close operations within 6 months of a cyber attack, it would appear that far too many small businesses are shutting their doors for good due to employee mistakes.

The solution, it would appear, is for businesses to invest more in risk management. This may mean not only increasing security measures through software and consistently utilized procedures, but also purchasing Cyber Liability insurance as a way to help mitigate risk. While a business cannot fully prevent the possibility of cyber attacks, data would seem to indicate that businesses can reduce a large number of threats by taking better internal precautions, while insuring themselves to make sure they remain solvent in the event of a data breach.