The Hidden Costs of a Cyberattack and How to Help Your Business Recover

From phishing emails to ransomware attacks and data breaches, cyber incidents can cause major disruptions, financial losses and damage to your reputation. And while firewalls and software help, they're only part of the solution. To help you protect your small business from cyber threats, cyber insurance should be part of your business protection plan.

Let's dive into what makes small businesses vulnerable to cyberattacks, what those attacks can cost you and how cyber insurance can help you recover-and stay in business.

Anytime is a good time for a cybercrime

Cybercriminals aren't just going after massive corporations. In fact, they often prefer small businesses because they tend to have fewer defenses.

Here are a few real-world scenarios small businesses across industries are facing:

• A restaurant's point-of-sale system is hacked, stealing customer credit card numbers over several weeks before anyone notices.
• A law office employee clicks a phishing email, unknowingly giving a hacker access to client files and sensitive communications.
• A dog grooming business uses scheduling software that stores customer phone numbers and payment details, which are exposed during a vendor's data breach.
• An e-commerce shop is hit with ransomware, locking down access to orders, shipping info and customer history until a payment is made.

No industry is immune. If your business uses the internet to communicate (and, let's face it, your business probably does), store data or accept payments, you're already at risk.

What happens after a cyberattack?

Cyberattacks can be deeply disruptive, even paralyzing. Beyond the frustration and downtime, you could face:

• Data recovery costs to repair or replace compromised systems
• Customer notification requirements (and the potential for reputational damage)
• Legal costs or regulatory fines if protected data is exposed
• Business income loss while your operations are suspended
• Cyber extortion or ransom demands, which could require expert negotiation
• Third-party lawsuits from potentially affected clients or partners

The average paid claim for a small business cyberattack is $45,000.^[1] Most small businesses don't have the resources to absorb a hit like that.

Cyber insurance is more than a safety net

Cyber insurance isn't just about filing a claim after something goes wrong. It's a proactive part of your business protection plan-helping you respond, recover and resume operations with less disruption.

With Cyber Suite^[2] from ERIE, you'll be prepared to respond to a wide range of cyber incidents such as breaches of personally identifying or sensitive information and threats that could jeopardize the safety of that information.

That's why ERIE partnered with Hartford Steam Boiler to offer additional coverages that are not typically included in business policies-including these first- and third-party coverages.

First-party coverages

• Data Breach Response Expenses - to pay for forensic IT review, breach notifications, legal review, PR services, reward payments, and services to affected individuals including a toll-free help line, credit report and monitoring, and identity restoration case management. Plus, coverage for both regulatory and PCI fines and penalties (when legally insurable under law) and PCI assessments.
• Computer Attack - to pay for data restoration, recreation and system restoration costs due to a computer attack which damages data and/or software. It also includes business interruption, PR services, reward payments and future loss avoidance coverage for improvements to a computer system after a computer attack.
• Cyber Extortion - to pay for the cost of responding to a cyber extortion threat, including the cost of a negotiator or investigator and any amount paid in response to a credible cyber extortion threat.
• Misdirected Payment Fraud - to pay for the direct financial loss including diverted money, payment or tangible property completed through use of email, fax or telephone.
• Computer Fraud - to pay for the direct financial loss resulting from a cybercriminal who uses an unauthorized system to transfer money, securities or other property from your offices or bank to another person or place.
• Telecommunications Fraud - to cover payments owed to a telephone service provider, resulting from a fraudulent charge caused by an unauthorized access to your telecommunications system.

Third-party coverages

• Privacy Incident Liability - Coverage for costs (within limits) to defend against lawsuits by affected individuals or judgements brought by state or regulatory agencies resulting from a covered "privacy incident."
• Network Security Liability - Coverage for your settlement and defense costs for suits alleging your computer security negligence.
• Electronic Media Liability - Coverage for your settlement and defense costs for lawsuits alleging copyright or trademark infringement, defamation of a person or organization, or violation of a person's right to privacy.

Rounding out your protection

ERIE also offers two Identity Recovery coverage options for an additional premium:

• Identity Recovery for Owners
• Identity Recovery for Owners and Employees

With Cyber Suite from ERIE, you'll be in control and able to protect your business. Plus, you'll be supported by a team of cyber professionals experienced in handling these types of claims.

Some insurance providers-including Erie Insurance-also offer risk control services, such as basic cybersecurity assessments, policy templates and access to additional support. That kind of support can be especially valuable if you don't have an in-house IT team.

Protecting your business starts with a conversation

You don't need to be a cybersecurity expert to protect your business-but you do need to be realistic about your risks. Start by taking inventory: What kinds of customer or employee information do you store? How would a system shutdown affect your daily operations? What's your plan if something goes wrong?

An Erie Insurance agent can help you think through those questions and determine whether cyber insurance makes sense for your business. Even better, cyber insurance with Erie Insurance can connect you to resources that can help you prevent attacks in the first place-not just cover the aftermath.

Cyber risks are real-but they don't have to derail your business.

Contact your local ERIE agent today to learn more about how cyber insurance and risk control resources can help you stay protected, prepared and focused on what you do best.