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Phishing: A Critical Factor in Cyber Insurance Evaluation

Phishing: A Critical Factor in Cyber Insurance Evaluation

In our digital era, protecting your business from cyber threats is non-negotiable. Equally essential is cyber insurance, which covers any financial losses resulting from successful cyber-attacks. For SMBs in Edmonton, mastering cyber security preparedness means getting to grips with the nuances of cyber insurance and understanding exactly how digital vulnerabilities impact the cost of premiums. Today, we’ll be examining the influence of one area in particular on insurance: phishing.

What is Phishing?

Phishing is a social engineering type of cyber-attack where criminals pretend to be legitimate parties in order to steal confidential data from businesses (like financial records, login credentials, or credit card information). Usually, phishing attacks are launched through email, social media, or fraudulent (if very convincing) websites. The aim is to trick the recipient into clicking on malicious links or attachments, which then unleash malware onto their system to wreak havoc.

How Common Are Phishing Attacks?

In short, very. Phishing is among the most well-known ransomware trends because it’s something nearly every business will encounter in their lifetime. Worse, phishing attacks are on the rise; at the end of 2023, instances had increased by nearly 60% compared to 2022.

Why Does Phishing Affect Cyber Insurance Costs?

Whilst phishing itself doesn’t impact the cost of cyber insurance premiums, falling victim to frequent phishing attacks is symptomatic of a business’s lack of cyber security preparedness. This is a key factor that insurance providers consider during evaluations, and it’s largely what determines the price of coverage.

  • Higher Risk, Higher Premiums: A business with inadequate cyber security measures is considered ‘high risk’. This translates to higher insurance premiums because the likelihood of them filing a claim is greater. Businesses without strong phishing defenses are willingly leaving themselves more susceptible to the most frequent type of attack, which means their rates will be on the higher end of the spectrum.
  • Evaluation and Assessments: As we alluded to above, during the evaluation process, insurers assess the cyber risk management practices of a business. This includes reviewing existing security protocols, employee training programs, and incident response plans. Businesses with poor cyber security defenses are likely to receive unfavorable evaluations, leading to higher premiums and reduced coverage options.
  • Policy Limitations: Insurers may impose stricter terms or restrictions on coverage for businesses that don’t demonstrate adequate cyber security measures. This means that even if a claim is made, the payout might be limited due to the lack of preventive measures in place.

In summary: demonstrating weak cyber security measures (like a lack of techniques to combat phishing attempts) shows cyber insurance companies that your business isn’t serious about data protection or ready to handle attacks. This means you’re more likely to fall victim to cyber threats and file claims. If insurers offered you the same level of coverage as better prepared businesses who encountered cyber crises less often, they’d be paying out an awful lot of money. To offset this, ill-prepared businesses either have to pay significantly higher upfront costs or foot the bill themselves when the inevitable happens over and over and over again.

Clearly, this is unsustainable for most SMBs. So, how do you find out if your cyber security preparedness is sub-standard before sky-high insurance premiums let you know?

Spotting Poor Cyber Risk Management Techniques

If your SMB is guilty of these bad IT practices, you might be considered higher risk:

  1. Lack of Employee Training

Why it’s a Vulnerability: Employees are often the first line of defense against phishing attacks. Without proper training, they may not recognize phishing emails or understand the importance of not clicking on suspicious links.

Impact on Insurance: Insurers look for evidence of regular and comprehensive cyber security training programs. A lack of training indicates a higher risk of phishing incidents, leading to higher premiums and stricter policy terms.

The Solution: Regular cyber security training mitigates this by increasing team awareness of new and evolving forms of phishing and other ransomware trends, empowering them to navigate their inboxes with confidence. Between sessions, simulated phishing exercises can further help reinforce these lessons.

  1. Weak Email Security Measures

Why it’s a Vulnerability: Inadequate email security measures, such as the absence of spam filters, anti-phishing tools, and email authentication protocols, increase the likelihood of phishing emails reaching employees’ inboxes in the first place.

Impact on Insurance: Weak email security measures signal a high risk of phishing attacks, resulting in higher insurance costs and potentially lower coverage limits.

The Solution: Implement advanced email security measures, including multi-factor authentication. Ensure that these measures are regularly updated to combat evolving threats, and take time to educate your team about using these tools effectively.

  1. No Incident Response Plan

Why it’s a Vulnerability: Without a clear incident response plan, businesses are unprepared to handle phishing attacks effectively. This can lead to delayed responses, increased damage, and prolonged recovery times.

Impact on Insurance: Insurers favor businesses with well-defined incident response plans that include steps for identifying, containing, and mitigating phishing attacks. The absence of such a plan indicates poor cyber risk management, leading to higher premiums and limited policy options.

The Solution: Work with an experienced IT team to develop and maintain a detailed incident response plan that outlines what your team will do in the event of a phishing attack. Regularly review and update this plan to ensure it remains effective.

How Local IT Support Strengthens Cyber Security in Edmonton SMBs

An expert team could help implement protective measures to improve insurance terms and cyber security in Edmonton businesses. This might include:

In-Depth Auditing: Carrying out thorough risk assessments to pinpoint any weak spots in your defenses that ought to be reinforced. This vital first step ensures you meet any eligibility criteria for solid cyber insurance coverage.

Industry-Grade Defenses: Designing a solution package entailing multi-layered defenses proves to insurance companies that you take cyber security preparedness seriously.

Ongoing Monitoring: Conducting periodic cyber security reviews to identify and address any new vulnerabilities, keeping you in line with your insurance terms. This proactive risk management approach demonstrates to insurers that your business is committed to maintaining strong security standards throughout your time with them.

Strategic Insights: Understanding current ransomware trends and their connection to phishing attacks can help local SMBs stay ahead of emerging threats. This knowledge is crucial for adapting cyber security strategies and showing insurers your dedication to remaining a low-risk business.

Final Thoughts

Phishing vulnerabilities significantly impact cyber insurance evaluations and premium costs. For SMBs in Edmonton, prioritizing cyber security preparedness through robust training, strong email security, and effective incident response plans is essential. By proactively addressing these key areas, businesses can not only reduce their risk of falling victim to phishing attacks but also benefit from more favorable insurance evaluations and potentially lower premiums.

Tier 3 IT Solutions: Trusted Managed IT and Cyber Security Partners in Edmonton and Alberta

Since 1990, our team have been securing local businesses through thoughtful IT solutions and a genuine partnership. Our expertise means we’re well-placed to offer support and insights that ensure SMBs across Edmonton remain eligible for cyber insurance and thoroughly protected against cyber-attacks. Call on us to optimize your defenses and minimize the risk of successful phishing attacks; we’d love to hear from you.

Phishing: A Critical Factor in Cyber Insurance Evaluations.
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Hi, I'm Jesse and I look forward to speaking with you.

An IT Support partner that you can trust.

I’m proud of the team we’ve assembled and the service they provide to our clients.  It’s because of them that we’re able to make a positive impact in our clients’ businesses and the communities we serve.

Our clients run businesses that depend on technology to operate but don’t have the expertise in-house to manage all the aspects of their Information Technology.  Our unique service delivery model is focused on a business first approach whereby we seek to understand what you’re trying to achieve, and how technology can help you move closer to those goals.  I’d love to connect with you to talk about how we might be able to help you improve the Stability, Security, Strategy, and Supportability of your network.