Research by Santam, South Africa’s largest short-term insurer, reveals that while cybercrime is one of the top three risks identified by commercial entities in the country, only 26% of respondents have cybercrime cover in place. This is especially concerning as the average cost of a data breach is now $4.45 million worldwide, up 15% in only three years.

“This is particularly concerning as South Africa has been identified as a hotspot for crimes such as identity theft, data breaches, malware and phishing scams. Although attacks on large corporations may make the headlines, it’s the frequent attacks on smaller businesses that is more concerning. The 2022 SHA Risk Review found that one in three small and medium enterprises (SMEs) had been the victim of a cyber-attack, said Thabo Twalo, Chief Underwriting Officer at Santam Broker Solutions.

“Cybercrime should be taken more seriously by South African businesses. Despite several recent high-profile cyber-attacks, research suggests that while cybercrime is recognised as a risk, local business owners under-estimate the protection measures required and most don’t have the necessary cover in place,” he added.

Twalo explains that their research found that large commercial (44%) and large corporate (28%) respondents led the way in taking up insurance, and although many SMEs appreciated the risks, there was a strong perception that “it would never happen to them”.

He explains that cybercrime invariably involves gaining illegal access to a computer or IT system to extract information or to implant malware, which can disrupt a business in various ways. “For example, cyber extortion is when malware known as ransomware, is used to extort money from a company, threatening actions such as the destruction, theft or illegal distribution of data.

“Emails continue to be the most common means of illegal access. According to a Mimecast report, email remains the number-one attack vector for cybercriminals, and phishing attacks remain the top threat to email users,” says Twalo.

SMEs need to be extra vigilant in preventing cybercrime because they are easier to attack, often lacking adequate protection. Among other things, SMEs need to increase staff awareness around cyber-security, reduce the unnecessary transfer of information and avoid complacency in managing data.

The work-from-home trend since the pandemic has compounded risks, he explains. “Security measures could include providing work-issued computers to employees working remotely and ensuring they are used only for work-related tasks and installing anti-malware protection to detect threats. Employees should be required to ensure routers have built-in firewalls and that they change passwords often.”

Twalo says that SMEs need to ensure that they have adequate insurance in place to protect the business from this growing threat. To ensure that all aspects of their businesses are protected, business owners should have a policy in place that provides cover in the following key areas:  

• Data breach and restoration: After a breach, the business may be liable for damages to third parties. This extension covers legal defence costs and damages if the case is unsuccessfully defended.
• Third-party liability: This provides cover against claims made against the business by clients or agents who experience a cyber-attack on its system.
• Business interruption: This is designed to assist SMEs get back on track after a breach.
• Cyber extortion and cybercrime: This helps get businesses running as soon as possible after a cyber-attack and manages the financial implications of a ransomware attack.

“All businesses have an obligation to protect not only their interests, but those of their customers and other stakeholders. When in doubt, consult a financial adviser to ensure that your insurance policy covers all threats and is prepared to survive cybercrime, concludes Twalo.