Article provided by Discovery
In this article, we explore a risk that can damage your business to the core – cybercrime.
Digital disruption has powered the rapid rise of innovative start-ups – making it easier for agile businesses like Uber or AirBnB to enter the market with relatively low capital and infrastructure needs. But, with the rise of digital technologies comes a real risk for businesses – cybercrime, hacking, viruses and malicious codes.
South Africans, for example, lose more than R2.2 billion to internet fraud and phishing attacks a year, and the country is ranked third on the Cyber Exposure Index.
What happens to a small business when they fall victim to a cyberattack?
Discovery Insure CEO, Anton Ossip, says it is important that small businesses do everything in their power to protect themselves and their clients from potential cyberattacks.
He says: “Small businesses will usually have a few computers they rely on for their daily operations. A cyberattack to these computers will mean that the business cannot operate optimally until they can fix the affected computers. They could also lose essential data – including their clients’ data – which could expose their clients to illegal activities.”
“A cyberattack on a small business will lead to interruptions in normal business operations,” he continues. “This is likely to lead to loss of revenue or loss of profits, which may even cause the small business to fail.”
The legal repercussions of a cyberattack on your business
Human error by management or employees can lead to a cyberattack like a hack, virus or malicious code affecting the computer system. However, cyberattacks can happen even in the absence of human error.
Ossip explains that a cyberattack can lead to system damage and to loss or theft of confidential and personal information stored on the computer system. This could be clients’ information or information that belongs to the business.
If a cyberattack happens, a third party whose data is compromised may sue your business, resulting in legal costs. The business may also be found liable to compensate the third party for any losses they incurred following the attack.
“For example,” Ossip explains, “A computer system is hacked and as a result clients’ credit card information is stolen. This leads to money being stolen from these clients. The business may be liable to compensate them for the financial loss they suffered.”
How can SMEs safeguard themselves against cyber risks?
“SMEs are most vulnerable to cyberattacks because they often do not or cannot invest in the appropriate security,” Ossip says. “SMEs need to make sure they have sufficient cyber insurance cover according to their unique business needs.”
Having cyber insurance gives SMEs the benefit of recovering quicker following an attack. Small businesses need cyber insurance cover precisely because cyberattacks can and do happen, even if the business has cyber security in place.
Don’t let cybercrime end your business – invest in good cyber insurance cover.