National opinion: Cyber-attacks: When the unthinkable happens

In our ever-evolving digital age, business owners face new risks that weren’t present even 10 years ago. Most people didn’t know what cyber extortion was in 2010. Today, these criminals target the most vulnerable small to midsize companies that do not have the financial resources to weather a business interruption of that magnitude. Should this happen, many business owners are left with no way out but to pay the blackmail demands or suffer the consequences.

Potential cyber risks continue to grow.

DoS: Denial of service attacks overwhelm a network with bogus requests, locking the company out.

Ransomware: The computer network is held hostage by locking out the company from its network until the attacker receives the ransom and provides instructions to restore the network.

SQL Injection: Structured query language takes advantage of websites that depend on databases to function.

Trojan Horses: A program that appears legitimate but opens a backdoor into the network so sensitive information can be accessed.

Malware: Malicious software that is programmed to destroy computer networks and, in many instances, is also highly infectious, being easily transferred to other computers.

Phishing: is most often encountered when a person opens a seemingly legitimate email. The goal is to grab personal or sensitive information from the recipient. Whale Phishing involves targeting C-suite executives as they are likelier to have proprietary and confidential information about the company and its operations.

Eavesdropping: The attacker intercepts information sent through the network and can collect usernames, passwords, and credit card information.

Cyber-attacks cause significant financial and brand name damage if not proactively safeguarded against. Simple steps you can take now are: regularly updating software and security protocols, securing data storage systems, and ensuring employee training programs cover the latest safety protocols. Our team not only uses a cyber security training platform to stay up to date on the most current trends, but we also offer it to all of our clients with a data breach policy.

What about the financial damage when a threat becomes a reality?

For regular day-to-day risks, businesses will seek safety within commercial cyber insurance. However, traditional underwriters only insure a few of these newer risks due to their complexity and potential for significant policy losses. Uninsurable cyber threats or the repercussions of a cyber-attack can be challenging to manage because they can significantly impact your company’s finances. Uninsured risks may include loss of trust resulting in decreased revenue, public relations crisis management, limits to your extortion ransom payments, loss of intellectual property, and more.

What happens when one of these uninsurable risks happens?

One solution to protect your business from uninsurable financial risks is establishing an 831(b) Plan, also known as a micro captive insurance company. The 831(b) Tax Code allows your business to own and control its own small insurance company, which provides coverage for risks that traditional insurance companies may not cover, such as; cyber-attacks, but can also be used to cover reputational damage, supply chain disruptions and other uninsured risks.

Would an 831(b) Plan Benefit My Company?

In the face of rising cyber threats and the staggering costs associated with them, the need for a robust and tailored risk management strategy is clearer than ever. An 831(b) Plan, or micro captive insurance company, emerges as a compelling solution for small to midsize companies navigating this treacherous landscape. Unlike traditional insurance options, an 831(b) Plan offers your business the unique opportunity to own and control a small insurance company designed to cover the specific risks your business faces, including those associated with cyber-attacks.

The tax benefits under the 831(b) Tax Code are designed to encourage businesses to proactively manage their risks, potentially translating into substantial cost savings and tax deferral benefits.