Zurich research finds small to medium businesses in Australia are risking ruin from cyber crime
The report, Global interconnections of cyber risk: impact on small and medium-sized enterprises, warns that despite the advantages for SMEs in terms of handling more customers, providing superior service and competing with far larger companies, an increased internet reliance exposes companies to significant risks they tend to overlook - not just those posed by data breaches or theft of trade secrets, but larger global shocks.
The warning to SMEs is directed at owners, risk managers, corporate executives, board directors and government officials, which the report says are generally 'not prepared' for the internet of tomorrow.
According to Zurich's Head of Financial Lines Australia and New Zealand, Marc Luginbuehl, while the outlook is alarming, there are solutions SMEs can take to minimise any fallout from a global system shock.
"An additional problem that is revealing itself is that hackers are now often targeting an SME not for its own value, but because of its connection to bigger business which may be relying on the SME for something critical to its operations,"says Marc.
"Therefore it's never been more valid than now to remind SME's that, while they should investigate and potentially embrace emerging technologies such as cloud storage, it would be remiss of them not to take great care to understand and mitigate the unique risks that can arise from their implementation."
The number of SMEs using cloud storage technology continues to rise as acknowledged by the Australian Government following the release of a Cloud Computing Guide for small business. Recent MYOB statistics also show small businesses using cloud services were 106% more likely to see a revenue rise in the past year than businesses not using cloud services.
Marc says solutions for business owners and CEOs include periodically meeting with line staff and managers to examine how cloud-service companies, as well as other parties such as outsourcing partners and suppliers, might expose the company to risks.
"For best results, combine this with regular drills for detecting cyber breaches and developing formal procedures on how to respond to any disruptions, as well as reviewing the company's access to its client’s systems and the client information kept in the company systems," he advises.
Other recommendations for SME's include improving cyber security, shifting mentalities from protection towards resilience, and have owners or CEOs step up in the risk management stakes by making time to better understand the technologies that their company relies upon.
"They need to determine how these disruptions could lead them to lose important clients, or potentially even force them into bankruptcy. We should be seeing the desire of conscientious managers to further develop a holistic view on risk and well rounded risk management approaches when exploring potential systemic cyber failures."
"Businesses, irrespective of size are encouraged to further protect themselves from the impact of cyber crime by taking out Security and Privacy Insurance. Care should also be given to understand the varying covers that are available in the market, there can be significant differences in what is provided with some products leaving clients vulnerable to untargeted attacks such as waterhole attacks and ransomware which are becoming increasingly common," adds Marc.
For further information contact:
Head of Marketing, Communications & Customer, General Insurance
Zurich Financial Services Australia Limited
Level 3, 5 Blue Street, North Sydney, NSW 2060
Phone: +61 (02) 9995 1368
Zurich Insurance Group (Zurich) is a leading multi-line insurer that serves its customers in global and local markets. With about 55,000 employees, it provides a wide range of general insurance and life insurance products and services. Zurich’s customers include individuals, small businesses, and mid-sized and large companies, including multinational corporations, in more than 170 countries. The Group is headquartered in Zurich, Switzerland, where it was founded in 1872. The holding company, Zurich Insurance Group Ltd (ZURN), is listed on the SIX Swiss Exchange and has a level I American Depositary Receipt (ZURVY) program, which is traded over-the-counter on OTCQX. Further information about Zurich is available at www.zurich.com.