As many as 2.3 million UK business leaders say cyber-attacks are one of their biggest concerns, yet less than one in five companies have a standalone cyber insurance policy.
This was one of the key findings from a survey by insurance specialist Gallagher, which suggested that many bosses mistakenly think that traditional business insurance typically covers the cost of a cyber-attack.
Midsize businesses are particularly exposed to business damage with nearly half (46%) incorrectly believing that cyber-attacks are ‘mainly an issue for bigger organisations’.
Many businesses owners buy a policy direct from an insurer (43%) without the advice of a broker, leaving them potentially unaware of the risks their business may be exposed to.
Business leaders may also feel their business is protected against cyber risk as they have invested in technology, Gallagher suggested.
42% of bosses have invested in out of the box technology; however, only a minority (39%) have taken specialist external advice, leaving many making business critical decisions, potentially without the knowledge required.
Of the businesses surveyed, the majority of leaders in larger organisations cite cyber-attacks and data breaches as a big issue (59%), compared to a minority of bosses running firms employing 50 people or less (19%). But in 2019 a third of all businesses (32%) admitted they had been subject to a cyber-security breach or attack, showing that the risk is considerable to businesses of all sizes.
The most common type of cyber issue to impact UK businesses is phishing attacks (identified by 80% of business that experienced a problem), impersonation in emails or online (28% of businesses) and viruses, spyware or malware including ransomware attacks (27% of businesses).
Tom Draper, head of cyber at Gallagher, said: “The issue of cyber-crime is one of the biggest risks facing businesses today. Clearly there are practical steps businesses can take to help protect against cyber-attacks, but unfortunately the risk remains significant and many businesses are leaving themselves exposed to financial and reputational damage if they do not consider having specialist insurance in place.
“It is evident from our research that many bosses believe they are covered in the event of a cyber-attack, however traditional or off the shelf business insurance policies do not typically provide cover for cyber related issues.
“While there is evidence to suggest larger businesses are more commonly targeted, small and midsize businesses are still very much exposed to cyber security breaches or attacks and may not have sophisticated protection in place like large businesses, and cyber criminals will be aware of this vulnerability.
“They are also liable to be caught up in cyber attacks aimed at third party suppliers or those targeted at common systems and software, such as the cloud, on which their business may rely.”
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On an industry sector basis, there are also major discrepancies in bosses’ views on cyber attacks. More than half (55%) of leaders in the manufacturing sector believe cyber attacks are an issue mainly for other types of organisations, followed closely by healthcare leaders at 42%, and 44% of those in transport. The reality is that all three of these sectors are at high risk of cyber-attacks or data breaches.
Draper added: “Our data shows that bosses in some industries think they are less likely to be targeted but the reality is that the majority of businesses now have some exposure to cyber-crime. Both healthcare and manufacturing are industries that have been singled out as at high risks.
“In healthcare this is due to the nature of customer information they handle. The manufacturing sector, which includes automotive, electronics and pharmaceuticals companies, are vulnerable because cyber-attacks are primarily financial motives and are therefore likely to target businesses where they can demand a high amount of money as well as sell information to competitors.”