Cyber insurance (or cyber liability insurance as it’s also known) helps protect organisations from the damaging repercussions and financial fallout of cyber-attacks, cybercrime, and data breaches.
It helps stop attacks, fixes systems, compensates for financial losses, and deals with legal and regulatory issues.
That’s the simple version at least. But to understand what cyber insurance is and does, you first have to understand the threat. And that’s not always easy in view of the complex and constantly shifting landscape that cybercrime occupies.
What it’s important to know, however, is that digital risks and cybercrime aren’t going away anytime soon. With our collective reliance on tech, they’re only increasing and there’s no magic ‘delete’ button we can press to make them disappear.
That makes it vital to understand what the cyber threat is and what it means for your business. Also, what you can do to prepare your business for a cyber incident and help it survive the aftermath. Because the fallout can be devastating.
What is the cyber risk and why do I need cyber insurance?
Any sort of digital crisis has the potential to unleash chaos, whether that be a hacker infiltrating your systems or a staff member falling for a fake email. Money or data can go AWOL, and your network can be crippled, bringing business to a halt.
Cybersecurity is a global problem. But closer to home, the government’s 2025 Cyber security breaches survey states almost half of UK businesses (43%) and three in ten charities (30%) reported breaches.
Furthermore, 20% of businesses and 14% of charities said they were victims of cybercrime. The larger the business, the more likely they were to fall victim. 52% of those who were targets of cybercrime were large businesses, and 42% were medium businesses.
The point is, no matter what your type of business, we’re pretty much all dependent on tech these days - from email to websites to VPNs (virtual private networks). In fact, with hybrid working now the norm and so many people connecting to remote networks from elsewhere, we’re more reliant on it than ever.
And that makes us sitting ducks for cybercriminals. It also means any kind of digital outage presents a real problem. Because if the tech doesn’t work, nor do we.
What are the biggest cyber threats to my business?
At the top of the cybercrime league table comes social engineering. It translates as people being innocently manipulated into revealing valuable information or doing something they don’t realise will be harmful. The result is hackers get access to data, information, networks and even money.
Phishing is the most common type of social engineering. Of all businesses that experienced a cyber breach or attack, 85% of them said phishing was the most common and disruptive type.
Phishing emails appear to be legit and to come from a trusted source. But they’re a guise for persuading individuals to reveal sensitive information cybercriminals can use for fraud. Or to trick them into clicking on malicious links.
A more sophisticated type of phishing, called spearphishing, targets individuals. This type of attack might take the form of a fake email apparently from a regular supplier, asking an employee to pay an invoice using new account details. Cue money going straight into the hands of cybercriminals.
Another more recent and emerging threat is the use of AI. While it can do our businesses a great deal of good, it can also do it harm if not used carefully. It's important not to share sensitive information with AI tools. And keep your wits about you – AI is making it easier for cybercriminals to impersonate others too.
What other kinds of cyber-attack do I need to know about?
Ransomware is one of the big boys of the cyber-attack world and packs a hefty punch. Cybercriminals exploit IT security weaknesses or use social engineering techniques to infect a company’s network with malicious software.
Once the ransomware is in the system, it works quickly to encrypt data and lock it down. A message usually appears, telling hapless users that if they ever want to see their data again, they’ll have to pay a ransom - often in cryptocurrency.
Some pay up, some don’t. Some see their data again, others don’t – even those who’ve paid the ransom. Cybercriminals aren’t really known for their honourable intentions. And such is the scale of the problem, in 2020 the US made paying cyber-attack ransoms illegal.
Cybercriminals employ other damaging types of malware too. Much of it ends up on computers after users unwittingly click on bad links. Although, frighteningly, what are known as ‘drive-by attacks’ can happen if you’re simply unlucky enough to visit an infected website. No clicking required.
Malware can also come in the shape of keyloggers or spyware, which allow cybercriminals to record the keystrokes users make - including password entries. Plus, there are worms and viruses, and a whole lot of other sneaky tricks cybercriminals use to exploit other peoples’ computers.
End game
The end result of any kind of cyber-attack is broadly the same. A network is compromised (maybe for days), and your business loses money – either because there's a ransom to be paid, or systems and websites are down and trade grinds to a halt. Customers, meanwhile, go elsewhere.
A cyber-attack may also mean a data breach and the loss of sensitive data like customers’ personal or payment details. And that can put you in trouble not only with your customers, but with the regulator, which in the UK is the Information Commissioner’s Officer (ICO).
The ICO’s Data security incidents trends dashboard displays a running tally of UK data breaches and makes for some scary reading. It shows an average of 12,195 data breach incidents reported to it in 2024 - with 10,054 of them resulting in an investigation or informal action being taken.
All of which can be very costly for businesses. Not only in terms of fines, which can be up to £17.5 million or 4% of turnover, whichever is greatest. But also, in terms of damage to your reputation.
What does cyber insurance cover and how can it help?
Given the clear and present danger cybercrime poses, it seems the best course of action is to do like the Boy Scouts do and be prepared. Because relying on the bloke down the road ‘who knows a bit about computers’ when your network’s crippled by malware won’t really cut it.
Where cyber insurance has the advantage is that it provides you with a whole team of experts. That means technical experts to recover your systems after an attack. Legal experts to deal with the regulator and any claims against you for loss of personal data. And crisis PR experts to manage your reputation.
Plus, it does it all quickly. Most cyber insurance companies have a 24/7 response line you can ring for immediate help. That’s important, because the longer an incident goes on, the greater the damage – on several fronts. It makes getting back on your feet again as soon as possible vital.
It also pays your legal costs and any compensation you owe if you're sued for losing people's personal data.
You might also be worried about social engineering and financial cybercrime. You're right to be, they're two of the most common forms of cybercrime. The good news is, you can easily add extra cover on for these. As well as for business interruption, which pays out every day that your business can't trade due to a cyber-attack.
Survival of the fittest
Cybercrime is no longer a futuristic concept, it’s very much the here and now. And as the opportunities for it grow in line with our ever-heavier reliance on tech, the problems it causes are only going to multiply.
Let’s face it, when would-be hackers can go on the dark web and buy ready-made malware packages for just a few quid, it doesn’t bode well.
The fact is, cybercriminals are smart. They’ve got the know-how at their fingertips and they’re constantly probing for vulnerabilities in our security set-ups. Put that together with the fact your average tech-user isn’t quite so cyber-savvy, and you have a recipe for a pretty uneven fight.
Where cyber insurance can help is by putting the battle on a more even footing. It may not be able to prevent a cyber-attack, but it can give your business the tools it needs to deal with one quickly and survive. And survival of the fittest, after all, is what being in business is all about.
Read more about cyber insurance or ring 0345 222 5391 to talk to an expert.
Image used under license from Shutterstock.
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