“Cyber risk” might make you picture hoodie-wearing hackers in a dark room, but most cyber attacks don’t start that cinematically. They often stem from things like a reused password or a fake message that looks real.
These kinds of attacks can happen to anyone. If your business uses email, takes payments, stores customer info, or runs on apps, you have some level of cyber risk. The best way to combat it is with strong risk management:
Cyber Risk Management = Cyber Risk Assessment + Cyber Liability Insurance + Cybersecurity
What Is a Cyber Risk Assessment?
A cyber risk assessment is a way to assess the safety of your business’s digital operations. You can use it to:
- Identify where your business may be exposed to cyber risks
- Understand how likely something is to go wrong
- Measure the impact a cyber attack could have on your business
- Create a response plan and establish preventative measures
Did You Know?
Weak or reused passwords are one of the most common ways accounts get compromised. A simple password update can significantly reduce your risk!
8-Step Cybersecurity Risk Assessment Checklist
Use this checklist to quickly spot gaps in your current setup. If you answer “no” or are unsure about a question, that’s a sign you may have a gap in your cybersecurity worth addressing.
| Risk Area | Checklist Questions | Real-World Example |
|---|---|---|
|
Customer and Employee Data |
|
A crafter collects customer emails for marketing, but also stores full order histories and shipping addresses in an unprotected Google spreadsheet |
|
Payment Processing |
|
A hair stylist uses online booking and payments, but doesn’t review transactions regularly for red flags |
|
Passwords and Login Habits |
|
A food truck owner reuses the same password for all of their business accounts |
|
Devices and Software |
|
A consultant logs into client accounts from a coffee shop network without protection |
|
Backups and Recovery |
|
A photographer backs up all their footage and business information to the same Google Drive |
|
Vendors and Third-Party Tools |
|
A DJ uses different software to help manage their business and mix music for clients |
|
Employee Access and Training |
|
An event planner and their assistant share password-protected contracts with any outside vendor hired for their events |
|
Incident Response Readiness |
|
An online seller was sent a phishing email, and had to notify their customers that their data may be part of a data breach |
Tips for Strengthening Your Cyber Risk Management
It’s normal to find a few gaps with a cybersecurity risk assessment. What matters most is awareness and making small, consistent improvements toward managing those risks.
- Use multi-factor authentication (MFA) to add an extra layer of protection
- Avoid reusing passwords across multiple business accounts
- Use a password manager to generate and store strong passwords
- Make sure important business data is backed up and stored separately
- Try not to mix personal accounts or devices with business operations
Pro-Tip: Once you’ve assessed your risks, check out the Federal Communications Commission (FCC) Cyberplanner Tool. You can create a free custom action plan based on your small business’s risks.
How Does Cyber Liability Affect Risk Management?
Your assessment is only one part of a strong cyber risk management plan. It helps you identify and lower your risks, but no assessment or security measure can eliminate all risk. Cyber attacks can still happen, and when they do, you’ll need a recovery plan.
Cyber liability insurance is designed to help your business recover after a cyber attack. It may cover things like:
- Data breach response costs
- Ransomware payments and recovery
- Legal expenses
- Customer notification and response management
Why Do Small Businesses Need Cyber Liability?
Cyber attacks can happen to businesses of any size. Small businesses are often easier targets because their security tends to be less complex and monitored than that of a large corporation. It doesn’t take a large-scale attack to cause serious damage either.
“Any business that uses something as simple as a business email is exposed to cyber risk. Many attacks start small, such as a phishing email that looks legitimate. Once an attacker gains access, they can reach sensitive information like bank accounts and customer data. The cost to recover from an attack can easily reach hundreds of thousands of dollars — not to mention the time and disruption it takes to rebuild. That’s why cyber liability insurance is essential. It provides financial protection and helps businesses recover from these events.”
These types of attacks can look like:
- A fake invoice tricking you into sending money
- A hacked email account is sending spam to your clients
- Ransomware locking your files
- Customer data getting exposed
- Your systems going down during a busy week
Even one of these scenarios can disrupt your operations, impact your reputation, and add up to thousands in unexpected costs.
Common Small Business Cyber Myths
Myth: “Hackers only target big companies.”
Reality: Small businesses are often easier and more frequent targets.
Myth: “I don’t store enough data to matter.”
Reality: Even basic customer info can be valuable to a cybercriminal.
Myth: “My payment processor handles everything.”
Reality: They can help, but they don’t cover every scenario. If your business alone is compromised while using the software, you may be on your own to recover from the attack.
Myth: “Cyber insurance is only for tech companies.”
Reality: If your business relies on digital tools, cyber insurance is relevant to have.
Start Small, Stay Protected
The goal with cyber risks is to understand where your small business may be exposed and take practical steps to improve them over time. For businesses that rely on digital tools to operate (even just an email or Venmo account), it’s worth adding cyber coverage to your small business insurance as an added layer of protection.
Understanding your risks and having the right coverage in place is a smart way to strengthen your cyber risk management.
FAQs About Cyber Risk Management
How Often Should I Do a Cyber Risk Assessment?
You should do a cyber risk assessment at least once a year. It’s also a good idea to reassess whenever your business makes a change, like adding new software, hiring employees, switching payment platforms, or expanding your services.
Even a quick check-in every few months helps you stay on top of new risks.
What’s Included In a Cyber Risk Assessment?
A cyber risk assessment typically includes:
- How you store and protect data
- How you process payments
- Your password and access controls
- Device and software security
- Backup and recovery plans
- Employee access and training
Do I Need Cyber Liability Insurance If I Use Secure Platforms?
Yes, you still need cyber liability insurance if you use secure platforms. Platforms help keep attackers out, but if they get in, they don’t often help with recovery. Insurance helps fill that gap.
For example, your account could still be compromised from a recent attack, an assistant could fall for a phishing email, or data may be exposed through human error. Cyber liability helps cover the costs of responding to these types of incidents.
What’s the Biggest Cyber Risk for Small Businesses?
The biggest cyber risks for small businesses include:
- Weak passwords and account takeovers
- Phishing scams
- Ransomware attacks
- Data breaches involving customer information
