As a business owner, you’re focused on growth, innovation, and serving your customers. But in our connected world, new risks can emerge that threaten everything you’ve worked for. Cyberattacks are no longer a distant threat; they are a daily reality for businesses of all sizes. From data breaches to hardware failures, the financial and operational fallout can be devastating.
Understanding your cyber risks is the first step toward building a resilient business. This guide will walk you through some critical, yet often overlooked, aspects of cybersecurity and insurance. We’ll explain what “bricking” is and why you need specific coverage for it, explore the hidden dangers of “shadow IT,” and reveal common missteps that lead to denied cyber insurance applications.
Think of this as your straightforward map to navigating the complexities of cyber protection. We’ll break down these topics in simple terms, helping you make informed decisions to secure your business’s future.
What is Bricking and Why Does Your Policy Need to Cover It?
Imagine a cyberattack that doesn’t just steal your data but turns your essential devices—computers, servers, or point-of-sale systems—into unusable “bricks.” This is a bricking attack, and it’s a growing threat. Unlike software issues that can be patched, bricking corrupts a device’s core firmware, causing irreversible hardware failure.
The problem is that many standard business property and cyber insurance policies don’t cover this. They often require visible, physical damage for a claim to be valid. This creates a significant gap in protection, leaving you to foot the bill for replacing expensive and essential equipment.
Bricking Coverage: Filling a Critical Gap
This is where bricking coverage, often available as an add-on or endorsement to a cyber policy, becomes essential. It is specifically designed to cover the costs of replacing or restoring hardware rendered inoperable by a cyberattack.
Bricking coverage typically includes:
- Replacement Costs: The cost to replace bricked hardware, from laptops and servers to specialized machinery.
- Restoration Expenses: Costs related to installation, labor for swapping out devices, and the proper disposal of damaged equipment.
Without this specific endorsement, your business could face significant financial losses and extended downtime while you struggle to replace critical technology. It’s vital to review your current policies with an insurance professional to ensure you’re not left exposed.
The Hidden Dangers of Shadow IT
“Shadow IT” sounds mysterious, but it’s something happening in most businesses. It refers to any technology, software, or device used by employees without the knowledge or approval of the IT department. This can include using personal cloud storage to share work files, downloading an unapproved project management app, or accessing company data on a personal laptop.
While employees often turn to these tools with good intentions—aiming to be more efficient or innovative—shadow IT can open the door to serious risks.
The Risks Hiding in the Shadows
When your IT team doesn’t know about the software and devices your employees are using, they can’t protect them. This creates several vulnerabilities:
- Increased Cyberattack Surface: Unsanctioned tools aren’t protected by your company’s security measures, like antivirus software or firewalls, making them easy targets for cybercriminals.
- Data Leaks: Sensitive company information can be stored or shared through unprotected channels, increasing the risk of a data breach.
- Loss of Access: If an employee leaves the company, data stored in their personal accounts may become inaccessible, disrupting business operations.
While shadow IT can sometimes lead to discovering new, efficient tools, it’s crucial to manage the associated risks. Encouraging open communication between employees and the IT department can help your business adopt new technologies safely without stifling innovation.
Why Cyber Insurance Applications Get Denied
Applying for cyber insurance isn’t just about filling out a form. Insurers conduct a thorough review of your company’s cybersecurity practices. If your defenses are weak, your application is likely to be denied, leaving you uninsured when you need it most.
A denied application can leave your business vulnerable to catastrophic financial losses after an incident. For some companies, a major cyberattack without insurance coverage can be an unrecoverable event.
Common Reasons for Application Denial
Insurers want to see that you are taking proactive steps to protect your business. Here are some of the most common reasons applications are rejected:
- Inadequate Security Testing: A lack of regular cybersecurity audits and testing procedures.
- Outdated Software: Failure to keep software and systems updated with the latest security patches.
- No Incident Response Plan: Not having a clear, documented plan for how to respond to a cyberattack.
- Poor Data Backup Practices: Insufficient protocols for backing up data and recovering it after an incident.
- Weak Vendor Management: Not ensuring that your vendors and partners also have strong cybersecurity measures.
- Insufficient Employee Training: A lack of ongoing training to help employees recognize and avoid cyber threats like phishing.
- Non-Compliance: Failure to comply with data privacy laws (like GDPR or CCPA) or industry-specific security standards.
Addressing these areas before you apply for coverage is crucial. It not only increases your chances of getting approved but also strengthens your overall defense against cyber threats.
Securing Your Business, Simplified
Navigating the world of cyber risk doesn’t have to be overwhelming. By understanding threats like bricking, managing shadow IT, and preparing your business for the insurance application process, you can build a stronger, more secure organization.
Protecting your business is our top priority. We’re here to make the process simple and clear, helping you find the right coverage tailored to your unique needs. If you’re ready to secure peace of mind and ensure your business is protected, our team is ready to help.
Contact us today to review your current policies or to start building a comprehensive cyber insurance plan that lets you focus on what you do best—running your business.