Manufacturers Need Cyber Insurance When Impacted by a Cyber Loss

Manufacturing Man - Cover WHY THIS MATTERS

Manufacturers and distributors work in a world of “symbiosis” where each part of the supply chain relies on all the other parts. If one fails, the rest may fail as well.

Investing in high-quality cybersecurity measures should be a vital part of a manufacturer’s risk management strategy.

Executives and decision-makers, from large multinational companies to smaller producers, are left with the same important question: “Is it enough?” The answer is a resounding “No.”

If a business establishes cybersecurity measures, and stops there, that is only half of the equation. The other half of the equation is robust cyber insurance coverage.

Without an intentional, affirmative Stand-Alone Cyber Insurance Policy, your company remains at risk – vulnerable to residual cyber risk that you fail to prevent.

Your company’s residual cyber risk includes a very important sector of your business, your employees. Human error happens even with the best intentions by employees. One email with a malicious link or attachment can jeopardize your entire cyber risk management plan.

Cybercrime is Big Business

The numbers tell the story. Cybersecurity Ventures predicts that by this year (2021), cybercrime will cost the world over $6 trillion annually (up from $3 trillion in 2015). Ransomware is expected to worsen and make up a proportionately larger share of total cybercrime this year.

Ransomware Attacks on Manufacturers and Distributors

In 2019, one report found that half of the manufacturing companies had experienced a data breach or cyberattack.

In 2020, ransomware attacks significantly disrupted the manufacturing industry resulting in substantial losses in production and disjointed operations. In a disturbing trend in Q3 2020, bad actors appeared to single out

manufacturing organizations as victims of choice in their ransomware operations.

The latest Sikich Manufacturing and Distribution Report 2020 indicates less than 40% of respondents perform important data breach prevention activities, such as penetration testing, phishing exercises on employees, and assessments of vendors’ data security efforts. However, manufacturers and distributors remain vulnerable to breaches, with nearly half of respondents confirming a data breach during the past 12 months.

There appears to be a disconnect between cyber threats, cybersecurity, and cyber loss prevention, resulting in a severe financial loss to your company.

Employee Training

It is necessary to integrate security solutions and implement security best practices to prevent significant disruption to your business, beginning with cyber risk awareness by the company executive team, IT, risk management, and employees.

As noted in our previous article, human error may be a weak link that leads to a business interruption in your plant, distribution facility, or supply chain.

As Cybersecurity Ventures mentions, training employees is a significant variable with the potential to reduce ransomware damage costs.

You could take proactive steps to protect your company and employees from imposter emails – while they work in the office or during remote work:

Virtual meetings or conference calls to discuss best practices to prevent a security breach
Employee training on the latest phishing and social engineering attacks
- Dry runs to test employee’s cyber awareness.
- Do not click hyperlinks in emails from unknown senders
- Since domain and display name spoofing are prevalent, carefully review internal emails and use multi-factor authentication such as follow-up calls if unsure of the authenticity
- Never give personal information or login details in response to an email request to avoid business email compromise (i.e., fraudulent fund transfers)
- Report email attacks to the IT department or security manager
Backup critical files and systems, minimally your critical data assets
Develop data access protocols for system administrators and critical employees
Patch and update software systems to address weak points
Invest in reliable anti-virus and anti-phishing software
Create and practice your internal incident response plan, business continuity plan, and disaster recovery plan.
- Phishing emails succeed due to human error.
- Human error jeopardizes your cyber risk management strategy.
- A valuable solution is employee training with dry runs that test employees’ cyber risk awareness and best practices.
- Manufacturers conduct test runs of new equipment, ingredients, and safety measures. Why not do the same for employees’ cyber risk awareness?
- A failure to prevent human error from phishing emails may result in a ransomware attack with devastating business interruption and economic loss.
- Your business stands a better chance of recovery with a robust stand-alone cyber insurance policy.
- Create a chain of command to work with your cyber insurance carrier if a cyberattack occurs.

Manufacturers and distributors have an opportunity to change their behavior and outcomes – and to invest in Stand-Alone Cyber Insurance to help with some of the costs when a data breach or ransomware attack occurs.

Recovery with Stand-Alone Cyber Insurance

Your business stands a better chance of recovery with a robust stand-alone cyber insurance policy that provides coverage to protect your business against cyber-related losses, such as:

Ransom payments – when hackers lock your network or computer system demanding ransom payment for the key to unlocking your system.
Business interruption (BI) – when you lose business income during the cyber event (after a brief waiting period), including the policyholder’s net profit before taxes and extra expenses incurred during a shutdown of your computer network.
Extortion-related expenses – when you incur losses because of the extortion threat, such as making the ransom payment and the cost of hiring a security expert to advise you on how to respond to a threat.
Repair costs – when you sustain losses due to damage, disruption, theft, or misuse of your data, such as the cost to restore, replace or reconstruct programs, software, or data.
Incident response team – when you face costs associated with an incident response team's support.
Employee training tools – to help prevent attacks and protect your network and data.

Human error happens. One email or website containing a malicious link or attachment can jeopardize your entire cyber risk management plan and your bottom line.

Takeaways

Phishing emails succeed due to human error.
Human error jeopardizes your cyber risk management strategy.
A valuable solution is employee training with dry runs that test employees’ cyber risk awareness and best practices.
Manufacturers conduct test runs of new equipment, ingredients, and safety measures. Why not do the same for employees’ cyber risk awareness?
A failure to prevent human error from phishing emails may result in a ransomware attack with devastating business interruption and economic loss.
Your business stands a better chance of recovery with a robust stand-alone cyber insurance policy.

Reach out to a specialist cyber broker, such as Cyber Armada Insurance, to request robust cyber insurance solutions appropriate for your specific cyber risk transfer needs. We understand the evolving demands and expectations of cyber insurance clients.

Contact Cyber Armada to examine how your company faces potential financial losses caused by a cyberattack. Contact us at 888.727.6232.

Please watch for our future updates on supply chain risk.