Specialist liability underwriting agency Delta
Insurance has produced New Zealand’s first whitepaper looking at cyber risk effects on NZ businesses.
The agency compiled the study piece titled Safeguarding Business From Cyber Threats
in conjunction with the University of Auckland and says the most recent statistics it uncovered were sobering reading.
managing director Ian Pollard said: “Cyber risk will soon cost New Zealand businesses up to half a billion dollars a year, which is a much bigger figure than the $150,000,000 estimated back in 2011.
“Cyber crime is New Zealand’s third most prevalent crime.”
The research also found that business interruption caused by IT disruption is the second most prevalent threat to New Zealand SMEs, while data loss and data corruption was ranked third.
“It is critical for SMEs to re-evaluate the inaccurate perception that the scope of cyber risks is solely limited to the hacking of high-profile organisations,” the report said.
“In reality, data loss is the most common cyber threat faced by all businesses, and one that can have significant financial effects on SMEs.”
The paper cites Forbes’ estimate that 60% of SMEs that experience cyber-attacks are out of business ‘within a year’.
“Hence, with SMEs amounting to 97% of New Zealand businesses and over a quarter of the country’s annual GDP, their vulnerability to cyber risks is a crucial element of the country’s overall security that urgently needs to be addressed. This is especially due to the focus from cyber criminals on small businesses with minimal detection practices.”
The biggest mistake New Zealand companies make, said Pollard, is wrongly assuming they are covered under other insurances such as professional indemnity and general liability.
He said: “The most relevant threats, especially to SMEs, being data loss and corruption caused by viruses, are not covered under any standard insurance policy.
“More often than not, cyber risks are not just international espionage but include malware, botnets, viruses and even simple human error that can leave them exposed and facing a massive data restoration bill and huge loss of revenues as a result of a business interruption.
“As such, they aren’t taking adequate steps to ward off the risks before they occur.”
Pollard is planning to circulate the paper, the first of a series of thought leadership pieces the company is working on, at a cyber seminar initiated by law firm Meredith Connell
The seminar, which is aimed at risk managers, legal counsel in small to large corporations, insurance brokers and claims managers, will also feature Meredith Connell
’s Melissa Russell
’s Campbell McKenzie discussing some recent cyber crime cases, moderated by Chris Richards from Aon; and some insurance solutions and claims examples given by insurers and brokers.
The white paper was due to be launched on Delta
's website today.