March 2, 2023 | 5-minute read (848 words)
Cyber risk management refers to how you identify, protect and recover from cyber threats that stand to harm your startup or compromise your sensitive customer data.
You don’t have to be an IT specialist to understand the basic principles of cyber risk management, like choosing secure passwords, avoiding unsafe websites, encrypting your customers’ data, educating your employees on cyber security best practices and investing in robust security software.
But some aspects of cyber risk management are a little more specialized. Those are the ones we’ll dive into in this article.
Before you brush off cyber risk management, assuming your business is too young or too small to attract the attention of hackers, consider these eye-opening stats:
- 43% of cyber-attacks in 2021 targeted small businesses with fewer than 1,000 employees. Hackers are increasingly targeting small and micro-businesses because these companies have fewer security measures, and attacks attract less media and law enforcement attention.
- 37% of ransomware attacks (where hackers gain access to critical business systems and demand payment in order to release the stolen data or leave the system) hit companies with fewer than 100 employees.
- In 2020, small business cyberattacks cost companies $2.8 billion!
Any startup can be the target of a cyberattack. And every startup should follow these basic cyber risk management best practices.
1. Protect your valuable data
There are a number of ways your startup can safeguard critical data. One way is to encrypt all the devices your employees use to access data. By encrypting the data stored on phones, laptops, and tablets, your customers are protected in the event an employee’s device is lost or stolen.
Another way to practice cyber risk management is to educate your team on the best ways to avoid phishing and ransomware attacks. Did you know small businesses receive the highest rate of malicious emails?
As many as 1 in every 323 emails have malicious intent. But when your teams know the difference between safe emails and phishing content, you can safely avoid this growing cyber threat.
Password managers and mandatory password updates are two additional ways to help your employees keep customer data secure.
2. Follow legal disclosure guidelines
If you do experience a data breach, it’s crucial to follow legal disclosure guidelines to the letter. The exact steps your startup will be required to take post-breach vary by country and data type, but generally involve informing your affected customers and the relevant authorities within a tight timeframe.
Depending on the scope of your breach, you may also be required to report it to federal authorities, the Securities and Exchange Commission and other regulatory bodies. These authorities will likely require thoroughly documented details related to the breach circumstances and the actions you took to mitigate the attack.
3. Have a post-breach plan in place
A major security breach can throw your startup into chaos. But with a clear plan in place before an attack happens, you can recover from the incident with minimal cost, delay and liabilities.
A robust crisis management plan should include these basic steps:
Gather a full incident report. Determine how the breach occurred, which systems were affected, and which customers’ data is at risk or lost.
Prepare for disclosure. Know which breaches will require a disclosure, and what information must be shared with customers and stakeholders. It’s a good idea to work with a business lawyer to ensure you fully understand the post-breach requirements.
Monitor the impact. Closely watch how the breach impacts your business and customer retention so you can prepare for recovery.
Protect against future threats. Put systems in place to safeguard against a breach in the future. This may include disciplinary measures, if the breach was caused by company or employee negligence.
While no startup can be fully prepared for a breach, with your plan in place, you can be ready to act quickly and recover fully.
4. Insure against major liabilities
The final way startups can exercise healthy cyber risk management is to purchase cyber liability insurance. This is a special kind of insurance that covers businesses in the event of a data breach or other form of cyberattack.
It can protect your startup from significant financial losses resulting from stolen customer data, ransomware attacks and other malicious incidents. It can also help cover the cost of notifying your affected customers, and the legal fees related to any lawsuits that may arise after the breach.
Cyber risk management benefits your startup’s bottom line
Startups aren’t immune from the threat of cyber hacks. But by developing healthy cyber risk management habits from the earliest stages of your growth cycle, you can build invaluable trust with your customers while protecting your business from attack.
Today’s customers want to know the businesses they shop with take data protection seriously. And moving forward, it’s likely customers will become even less forgiving when it comes to breaches. If your company doesn’t prioritize security measures, there’s a good chance a company down the road will — and that’s where customers will choose to shop.