Cybercrime:
What You Need to Know as an Online Business Owner
6 minute read
Did you know that the global economy lost $600 billion in 2017 as a result of cybercrime?
Cybercrime is the result of poorly managed cyber risks, which refer to any risk of financial loss, disruption or damage to the reputation of an organization – primarily due to the failure of its information technology systems.
In this age of digitization, it is important for every online business owner to know the risks associated with cybercrime so that they can best safeguard their businesses against such cyber attacks.
Keep on reading to find out more!
You as a Business Owner
Imagine this:
You are in the business of operating an online store that sells products for consumers, and are marketing it to your social media and website channels. Your consumers directly purchase from your online channel – creating profiles that include personal details such as their name, contact number, email and address – so that you can deliver your products to them. Payments are made online through PayNow or credit card, with all of this crucial personal information being stored on your laptop.
Let’s say on an unfortunate day, you lose this laptop. What’s next?
A cyber hacker discovers your laptop and installs a malicious software on your system that results in the leakage of customers’ data including their personal identifiable information.
You discover what has happened, and now have to inform your customers. You prepare to remediate costs related to the cybercrime such as customer service recovery, fines from authorities, and potential litigation from affected parties.
Time has passed but you’re now in the deep end, with your business suffering significant and unrecoverable financial losses, reputation damage & legal consequences.
Sounds like a fictional story? Unfortunately not.
Such stories are all too common in this digital age, with even giant companies like e21, vHive and SITA falling victims to cybercrime as recent as March and April 2021.
How does a cybercrime affect my business?
Cyber hackers typically present themselves as an anonymous source with the intention of hacking and stealing information from your system. As mentioned above, this may result in the following:
Financial Losses
Financial stability is what keeps your company operating. Cybercrime hinders this as hackers could potentially “steal” your finances by transferring them out in the shortest time possible.
When this happens, you’d be operationally stuck with no capital to purchase your products. This inadvertently results in the loss of business and, subsequently, debt to your existing clients/ investors.
Damage to Reputation
Trust is an essential element of any customer relationship. Cybercrime can damage your business’ reputation and erode the trust your customers have in you. This could potentially lead to the loss of customers in the long run, resulting in a fall in sales profits.
The effect of reputational damage may even have an impact on your suppliers or relationship with partners, investors and other third-parties vested in your online business.
Legal Consequences
Data protection and privacy laws require you to manage the security of all personal data you hold – whether on your staff or your customers.
If this data is accidentally or deliberately compromised and you have failed to deploy the appropriate security measures, you may face fines and regulatory sanctions.
How can I mitigate the risk as a business?
Cyber insurance is designed to protect your company from these primary risks mentioned above. Its primary objective is to transfer some of these risks of security breaches to insurance.
Cyber insurance is thus essential for any business as it ensures that these costs are covered when your company encounters a cyber attack.
What can be claimed under cyber insurance?
- Business Interruption – loss of net profit and continuing operating expenses.
- Data and System Recovery – increased cost of work, data recovery costs, additional business interruption mitigation.
- Cyber Extortion – extortion payments and negotiation.
Wrap up
No business is immune to cybercrime and in the age of digitalization, its likelihood is expected to rise rapidly in the coming years. By transferring these risks to a trusted provider who can effectively manage it for you, you can operate your business with a peace of mind.
Sleek can help in such instances, with our new corporate insurance plans.
Reach out to us if you would like to be covered and our team of risk management specialists will be in touch with you.
