Among startups without cyber insurance, cost remains a top reason
Around half of startup founders report being pressured to invest in cyber insurance by their investors, board members or both.
More than two-thirds of startup founders say they have had a business fall victim to a cyberattack, according to the “Cyber Risk Index: Startup Edition” report recently released by Embroker. With virtual menaces so prevalent, it’s no wonder these business owners are taking the threat seriously, and 86% of founders said they already have some form of cyber insurance protection. Fourteen percent of startups are operating without existing cyber coverage, and nearly half of those (44%) cite cost as the main reason they’ve abstained from purchasing a policy.
How much cyber coverage these startups have in place varies from company-to-company, and 52% of surveyed founders reported having cyber coverage that is either customized to their needs or “the most comprehensive” cyber insurance they were able to obtain. Meanwhile, 27% said they have merely added basic cyber coverage to a pre-existing policy.
Around half of these startups have invested in cybersecurity insurance at the pressure of investors or board members – sometimes both – which indicates these powers-that-be are beginning to see cyber coverage as a necessity. Even those founders who aren’t being directly encouraged toward cyber coverage are still thinking about the issue; with 97% stating they discuss cyber protections and problems with their investors and board members.
“As the financial and reputational costs of dealing with cyber security incidents continue to increase, businesses large and small are decidedly incentivized to invest in their digital security and risk management strategy,” David Derigiotis, chief insurance officer at Embroker, said in a release accompanying the risk index. “Insurance providers have been able to increasingly support clients with this effort through strategic partnerships with cyber security vendors and coupling policies with ongoing risk mitigation tools.”
Concerns reported by the founders surveyed as we roll into 2023 include the impacts of inflation (32%), cyberattacks (27%) and supply chain shortages (26%). A copy of Embroker’s “Cyber Risk Index: Startup Edition” can be downloaded here.