Cybercrime has never been a greater threat than today. According to the Cyber Security Breaches Survey 2023, 2.39 million instances of cybercrime were reported; but the one type of attack that often makes headlines is ransomware.
These attacks encrypt everything on your network and demand a fee to decrypt it. If you fail to pay the fee, your data will be deleted. It’s easy to see how businesses could be destroyed overnight by this type of attack.
So, can cyber insurance cover the costs of ransomware?
What are the main types of ransomware?
Various types of ransomware exist. Despite the different types, most ransomware is delivered by phishing attacks. So, what are the main types of ransomware that you must be aware of?
Crypto Ransomware – By far the most common, this type of ransomware encrypts the victim’s system, locking them out until they pay a ransom in cryptocurrency for the decryption key.
Locker Ransomware – Locker ransomware doesn’t encrypt files but locks the victim out of their systems. For example, it could lock the computer screen.
Scareware – This ransomware attempts to scare people into believing their systems have become compromised. The only way to “fix” it is to pay a ransom.
Distributed Denial of Service (DDoS) Ransomware – DDoS ransomware involves continuously attacking using a DDoS attack vector until the victim pays a ransom.
Master Boot Record (MBR) Ransomware – MBR ransomware infects your hard drive’s MBR, preventing your operating system from loading until the ransom is paid.
These attacks are scary, and – more often than not – businesses have paid said ransoms. According to the BBC, 82% of UK businesses that were ransomware victims paid the ransom to get their data back.
What are the biggest ransomware risks for businesses?
Ransomware risks for businesses are enormous. According to cybersecurity agency Sentinel One, the cost of ransomware to medium and large UK businesses was £346 million in 2017.
Costs aside, these are not the only consequences of ransomware. Here are some of the risks every UK firm faces:
- Data Loss – Without your data and reliable backups, your business risks losing its data unless it pays the ransom.
- Downtime – Since ransomware attacks encrypt your systems, it usually means that your business cannot operate until the attacks end.
- Financial Impact – The financial impact is not only felt within the ransom itself but in downtime, loss of productivity and lost customers.
- Legal Impact – Ransomware can result in non-compliance with various data protection laws, including the General Data Protection Regulation (GDPR).
- Reputation Damage – Your reputation could also be at risk. If customer data is lost, you could erode hard-won trust and loyalty.
These threats are genuine. For example, in May 2021, the University of Northampton was attacked by ransomware known as “Conti”, which severely disrupted its IT systems and operations.
This could happen to your organisation too.
Can ransomware payments be covered by cyber insurance?
Cyber insurance is designed to provide you with peace of mind over ransomware. Any good cyber insurance policy will explicitly state that they cover ransom payments. Your insurance provider will sometimes negotiate and facilitate payment on your behalf, depending on your policy limits.
Cyber insurance however, covers more than the cost of paying a ransom. It can also cover other issues, including financial losses caused by business disruption, data recovery and forensics and legal costs.
Some policies may also include additional add-ons, such as cyber extortion coverage. This type of coverage extends your protection to cover third parties who threaten your business with ransomware.
In an increasingly risky cyberspace, cyber insurance is the number one specialist insurance policy you require to be fully protected from loss due to ransomware. At Stanmore, we can discuss your requirements to find the most suitable level of cover for your business.
The impact of ransomware attacks for businesses
We have already discussed the crippling damage that ransomware can cause, but how you are protected will determine the precise impact. Whilst insurance cannot account for the disruption caused by ransomware, it can help you to recoup your financial losses.
Here’s how the impact of ransomware could impact your business with and without insurance:
Without cyber insurance
· Loss of data
· Out-of-pocket ransom
· Business disruption
· Compliance risks
· Legal cases
· Loss of consumer confidence
· Severe downtime
With cyber insurance
· File a claim with your insurance provider.
· Let them handle the ransom/evaluate the losses.
· Recoup all financial losses resulting from ransomware.
· Return to normal business activities.
How to protect your business against ransomware
Defending your business against ransomware means focusing on data and phishing attacks; the latter is the most common attack vector for ransomware.
Above all, educating your employees on the risks, the most common red flags and how to report suspicious links/attachments is crucial. Cybersecurity must be a team effort, not siloed to the IT department.
Here are some tips for laying the foundations for protecting your business against ransomware:
Create Regular Backups – Ensure you have a frequent data backup strategy. Back this data up offline or in secure offsite locations so that you can restore your systems without paying a ransom.
Keep Everything Updated – Update all software and install patches when available to prevent attackers from taking advantage of known vulnerabilities.
Initiate Network Segmentation – Network segmentation divides your network into distinct sectors, stopping the spread of ransomware if an infection occurs.
Start Email Filtering – Strong email filters are vital for removing suspicious messages before they reach your inbox.
Install Anti–Virus/Anti-Malware – These programs should cover all conceivable company endpoints to reduce the chances of ransomware getting through.
UK firms are also advised to have a robust reporting system and an action plan if a ransomware incident occurs. No security plan can make you invincible, but for everything else, there’s cyber insurance.
At Stanmore Insurance, we provide bespoke cyber insurance policies for companies who want peace of mind. Cover your costs and increase your business resiliency with the specialist policy that defends your company from ransomware, phishing and DDoS attacks.
To learn more about how cyber insurance works, contact our team today.