Why Social Engineering is a Growing Threat to Businesses and How Cyber Insurance Can Help

So, what is social engineering?

Simply put, it’s a tactic that cybercriminals use to manipulate people into disclosing sensitive information. It could be something as simple as a phishing email that looks legitimate but contains a virus or links to a fake website. It could also be more complicated, like CEO fraud, where criminals impersonate high-level company executives to trick employees into sharing confidential information.

The consequences of social engineering can be devastating for businesses. Cybercriminals can access sensitive data, steal money, or use your company’s computer systems for their own gain. With stakes so high, it’s essential to consider ways to protect your business from social engineering. This is where cyber insurance can play a crucial role.

Understanding Social Engineering

Social engineering can take many forms, and it’s important to be aware of the most common techniques of cyber criminals. Some typical examples of social engineering include:

Phishing: A phishing email is designed to look like a legitimate message from a reputable source, such as your bank or a vendor. Once you click on a link or attachment in the email, your computer becomes infected with malware, which can allow hackers to access your company’s network and data.

CEO Fraud: In this increasingly common scam, cybercriminals posed as high-level executives in order to trick employees into doing their bidding. They may ask for credentials, access to sensitive information or convince employees to wire funds.

Ransomware: Once ransomware enters your computer system, it can encrypt your files and render your entire system unusable. Cybercriminals then demand payment in exchange for access to your files.

It’s important for businesses to train employees to identify these scams and how to respond appropriately should one occur.

How Can a Cyber Insurance Policy Help?

A cyber insurance policy can provide coverage for losses incurred by social engineering attacks. While standard insurance policies can provide coverage for business interruption, data loss, and liability, they may not be sufficient to cover losses from social engineering attacks.

With cyber insurance, businesses can get coverage that is tailored to meet their unique needs. Coverage can include reimbursement for monetary losses due to fraudulent transactions, liability protection in case there’s a data breach, and recovery costs associated with restoring data and mitigating other damages.

Real-World Claims Examples

Unfortunately, social engineering is not a theoretical threat, but a real one. Here are some examples of real-world claims:

  1. A company’s finance department received an email that appeared to be from the CEO. The email stated that a time-sensitive wire transfer needed to be made. The wiring instructions were fraudulent, causing the company to lose $500,000.
  2. An employee received a phishing email that looked like it was from a legitimate vendor. The employee clicked on a link in the email, which led to a malware infection, resulting in a business interruption loss of $75,000.
  3. Ransomware infects a company’s network, causing them to lose access to critical data. The criminals demanded a ransom of $100,000 in exchange for the decryption key.

Without social engineering coverage, these losses would not have been covered by standard insurance policies. However, with the right cyber insurance, businesses can rest easier, knowing that they’re protected against these types of attacks.

Talk to an Experienced Agent

It’s essential to work with an experienced insurance agent to determine the most appropriate cyber insurance coverage for your business. An agent can help identify potential risks and make recommendations to minimize them. They can also help you understand the different types of coverage available and protect you against social engineering attacks.

In today’s digital world, social engineering is a growing threat to businesses of all sizes. With cyber insurance, businesses can customize coverage to protect against losses caused by these types of attacks. By taking precautions to detect and prevent social engineering, businesses can keep their sensitive data safe and secure.

If you’re in Illinois and still have any questions, reach out to us here at The McBride Agency about how we can help protect your business with cyber insurance. With our proven expertise and a wide range of coverage options, we can help you choose the right insurance for your unique needs, so you can focus on growing your business with confidence.

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