“The Importance of Cyber Insurance for Small Businesses in 2023”

Companies that take out a cyber policy have to work through checklists in advance and deal with their IT. That, along with the training offered by cyber insurers, would help reduce the risk of IT attacks, says Payam Rezvanian, a member of the board of CFO24.

The best cyber insurance for business is the one that never needs to be called. Finanzchef24, which advises micro and small companies on security issues, has increasingly noticed this in recent years. The knowledge gained by companies when they deal with cyber insurance is enormous. Ideally, this helps to ward off attacks and take appropriate precautions to ensure the continued existence of the company. Companies can thus better understand and optimize their IT infrastructure in order to avoid attacks.

Although the number of cyber attacks fell slightly in 2022, the danger will remain acute in 2023. Researchers warn that AI technologies like ChatGPT could increase the number of cyber attacks in 2023. For the year 2022 alone, the damage caused by cyber attacks in German companies is estimated at more than 200 billion euros.

Some companies just can’t get back on their feet

We recommend taking out cyber insurance – not only with regard to possible financial compensation. After all, many IT gaps can be closed simply by taking the measures outlined in the application process. The insurance sum paid out alone is of little use if important data or your reputation has been destroyed forever. Some companies can no longer get on their feet despite financial reimbursement.

It is essential not to rely solely on insurance, but to take the necessary measures to avoid a cyber attack seriously. I know of an example where a company even had a second server for backup but never tested the backup. We often give this example in the consulting process so that other companies do not make such a mistake.

According to a recent study by HDI and Sirius Campus, companies are increasingly not taking the threat of cyber attacks seriously. In addition, the focus of attacks is increasingly shifting towards smaller companies. In the current survey, 39 percent of smaller companies (10 to 49 employees) stated that they had been the target of a cyber attack. In the previous year, only 31 percent of the smaller companies made this statement. In the case of medium-sized companies with 50 to 250 employees, on the other hand, the number of mentions fell from 43 percent to 36 percent. In the case of micro-enterprises with up to 9 employees, the mention remains constant at 25 percent (previous year: 26 percent).

Large companies better protected

Larger and medium-sized companies protect themselves better. Small businesses, on the other hand, are an easier victim. According to the Bitkom study, the threat remains high: According to studies, a good 9 out of 10 German companies have fallen victim to data theft, espionage or sabotage. The average damage is currently around 100,000 euros.

With these alarming numbers, protecting against cyber risk is becoming increasingly important, especially for small businesses, which often do not have the same resources to counter cyber attacks as large companies. Cyber ​​insurance can prevent and help to be able to act again quickly in the event of an attack.