Cybersecurity audits evaluate a company’s digital security controls and protocols to understand its risk level for cyberattacks. These audits allow insurance companies to determine the right cyber insurance coverage and rates for your small business.
From malware infestations to data breaches, cybercrimes are becoming smarter, slicker, and more common, and you need to ensure you’re taking the proper steps to protect your company from hackers.
A cybersecurity audit is a crucial step in securing and maintaining the optimal level of cyber insurance coverage for your business. By taking a detailed look at your company’s IT infrastructure, an audit provides a bird’s-eye view of any cybersecurity blind spots, compliance issues, and potential cyberattack threats.
Understanding and acting on these security gaps will not only better protect your business, but it will also help earn customer trust, avoid hefty fees from a data breach, and demonstrate accountability with your insurance provider, which can lead to lower insurance premiums.
Data and network security breaches can cost your small business a significant amount of time and money. Having cyber liability insurance, or data breach insurance, is vital in protecting your business from cyber threats, such as:
There are two main types of cyber insurance coverage: first-party liability and third-party liability. Both can help ease the financial impact of a cyberattack but in very different ways.
First-party cyber insurance covers financial losses from a direct attack on your business. This policy is highly recommended for retail stores, healthcare offices, and other small businesses that store sensitive client or customer information, such as credit card or Social Security numbers.
Third-party cyber coverage helps when a client sues your company for causing or failing to prevent a data breach or cyberattack on their company. This protection is crucial for tech companies and IT consultants who could be sued for errors that led to an attack.
While an impending cybersecurity audit might be causing you stress, the good news is that you can do a little prep work to improve your company’s results, possibly leading to better insurance terms and lower rates.
Here are a few important steps you can take ahead of an audit:
Before diving in, the auditors will create a clearly defined plan, identifying key stakeholders, a timeline, and which pieces of your cybersecurity protocol will be examined, such as:
Next, the auditors will take a closer look at your company’s cybersecurity components and policies to identify potential cyber risks and existing vulnerabilities. This examination might entail:
Successful prevention of data breaches starts with knowing what cyberattacks can look like. Here are a few of today’s most common threats:
Once they’ve completed their evaluation, the auditors will provide a report detailing their findings, which includes vulnerabilities, risks, and any compliance issues. With this report in hand, you can now create and implement a risk management and incident response plan that addresses current risks and what protocols and tools you have in place to remediate future cyber incidents.
This plan should cover how you will:
Insurance is another key part of your risk management plan. Cyber liability insurance can help protect your small business from the high costs of a data breach or malicious software attack. If you own a tech-based business, you may be eligible to bundle your cyber coverage with your errors and omissions (E&O) policy, which is commonly referred to as Tech E&O.
There are a few ways that a cybersecurity audit could affect your cyber insurance coverage. If the auditor only finds a few weaknesses and determines that your security protocol is strong, or if you work to understand the threats and promptly enhance your systems, you could negotiate better insurance terms, including lower premiums.
However, if you ignore the issues or don’t make improvements, you could end up with higher costs or even be denied coverage.
On average, the cost of a cybersecurity audit can run between $3,000–$5,000, but this number can fluctuate depending on a few factors, including:
You should also consider additional evaluation costs, such as penetration testing, remediation steps, ongoing monitoring, and security maintenance.
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While risk assessments and cybersecurity audits both play pivotal roles in keeping your business compliant and secure, they serve different purposes.
An assessment provides a health check of your company’s overall IT infrastructure, identifying weaknesses, inefficiencies, and opportunities for improvement.
An audit, on the other hand, is a more formalized, structured examination of how well you’re adhering to regulations, policies, and legal requirements.
Ultimately, audits and assessments can work together to impact the cost of your insurance. For example, an internal assessment can prepare you for a cybersecurity audit, ensuring powerful security protocols are in place and your organization is compliant.
Seeing these efforts in an audit report can increase your insurance provider’s confidence in your small business to help lower your rates—and keep them low.
Whether you’re unsure about buying first or third-party coverage, or you own a tech company and want to know more about bundles, our licensed insurance agents are here to help.
You can apply for free insurance quotes today from top-rated providers across the U.S. Once you’ve picked your policy, you can typically get coverage and a certificate of insurance (COI) within 24 hours.