As Managed Service Providers (MSPs), you play an integral part in ensuring an organization’s entire IT ecosystem is operational. However, have you taken the time to analyze how damaging cyberattacks can be to your very own business? We know that you focus on maintaining the security of your clients’ networks, but what happens when a calamity strikes your very own business?

Cyberattacks are no longer a nuisance—they are now a serious problem that incurs dire consequences for the targeted industry. In addition to ransom payments and lost profits, there are various other concealed costs that cyberattacks can impose that’ll heavily impact the finances of an MSP. That’s where the importance of cyber insurance is derived.

In this blog, we are going to look at why every MSP should focus on getting cyber insurance policies to defend their own business operations against the frequently ignored brutal impacts of cyberattacks.

The True Impact of Cyberattacks on MSPs

Most people assume that the impacts of a cyberattack are only confined to the targeted industry, and that is where they go wrong. From phishing attacks, ransomware, data breaches and even supply chain attacks, MSPs are in constant danger. Financial implications are incredibly clear on MSPs; however, things start to get tricky when we look at concealed costs.

What are these risks that lurks in the shadows?

Loss of Trust: When a cyberattack takes place and you do not face any economic losses or have data being stolen, it automatically makes a person question your reputation and credibility in the market. This, in turn, could lead to the clients losing trust in their ability to protect their data, resulting in a loss of clients and opportunity to gain new ones. Losing trust can take away business opportunities, and regaining them is extremely difficult.

Depending on the nature of the attack, you can be held legally accountable for breaches that have impacted your industry. Clients can often take legal actions leading to increased settlements. Fines for GDPR, HIPAA, or CCPA non-compliance breaches can also be exploited further in lawsuits.

At the end of the day, a breach can lead to legal sue, leaving the client with outrageously high-value fees and settlements.

Loss of data, downtime, and lack of business due to a breach in security leaves your clients with no other option but to meet their requirements using other service providers, leaving you with contracted revenue that is constantly on the verge of getting lost.

Recovery Expenses: Recovery or remediation from a cyberattack is not just about technology repair. It includes the communication costs such as client notifications, public relations costs, and potentially credit monitoring for impacted parties. In case a ransomware attack was suffered, the costs could spiral out of control very quickly, especially if ransom payment was required to regain access.

The Importance of Cyber Insurance for MSPs

You may ask, “Yeah, we understand ‘cyberattacks can cost’, but what is cyber insurance for?’ To put it simply.

Cyber insurance is intended to deal with the myriad expenses ensuing as a result to cyberattacks, encompassing those secret expenses we spoke about earlier. Here’s how it can safeguard your business:

• Addressing Financial Damages: Cyber insurance can deal with the financial damages suffered after a cyber attack. Some examples include loss of earnings, loss of business activity from clients, or even costs incurred from efforts to retrieve the missing information. Certain packages have the covering expense for paying the ransom as well in the case of ransomware malice.
• Reputation Management: Cyber insurance can assist in handling PR strategies after a cyber attack damages your reputation. With maintaining your client’s confidence as a priority, insurance can cover the costs for any crisis communication that assists in the remediation of the severing public image.
• Legal and Compliance Coverage: Legal fees as well as any required fines are covered under cyber insurance if sensitive data is exposed during a cyber attack. The policy will also assist with the legal defense costs and settlement payments for your client if they decide to sue after a breach.
• Data Breach Notification Costs: Your list of action items increases with a breach of data and your first priority should always include notifying the impacted individuals, especially if they involve business stakeholders. This particular step is usually expensive, lengthy, and time consuming depending on the attack and your location. These costs, in addition to offering credit watching for the affected individuals, can be covered with cyber insurance.
• Business Interruption Insurance: Any revenue losses accrued from business shut down as a result of cyber attack can be compensated with Interruption Insurance which is often included under Cyber Insurance. This approach helps cover the loss of revenue while dealing with the necessary remedial actions post the cyberattack.

How to Select the Best Cyber Insurance Policy for Your MSP Company

Firstly, policies differ from each other, and so it is advisable to choose a plan that suits the requirements of your business. Here are the following considerations:

• Coverage for Ransomware: As ransomware increasingly becomes an issue in the technology space, you will want a policy that covers ransom payments if your company is attacked. Make sure to check, as not all providers have this included.
• Data Breach and Liability Coverage: Be certain the policy covers legal expenses associated with any breaches regarding data. If you deal with sensitive information from clients, this could be a significant expense for your company.
• Cybersecurity and Risk Management Services: Some polices will have these perks, but others do not cover computer security consulting services or provide a network of specialists to handle prevention and response breaches. These additional services are potentially useful for MSPs trying to bolster their systems.
• Business Interruption Protection: As earlier stated, downtime can be extremely costly. Ensure that the policy covers business interruptions resulting from cyberattacks.
• Policy Limits and Deductibles: When selecting a policy, consider the types of cover available and any deductibles. Ideally, the limits should be enough to cover any expense that may arise from a serious breach, while still having a reasonable premium for your business.

Conclusion: Cyber insurance investment for MSP success

Cyber crimes are unfortunate parts of today’s modern world. For MSP (Managed Services Provider) companies, these attacks tend to inflict stress not only on your clients, but on your own business as well. Apart from the apparent monetary loss, the impact to reputation, potential legal action, and service interruption could be more detrimental in the long run.

For MSPs, not opting for cyber insurance is not a matter of choice; it is an investment. With a sophisticated cyber insurance policy, you are able to mitigate the risks associated with the wide-ranging impacts of cyber attacks, making you better equipped to deal with breaches.

With trust being at the core of the industry, obtaining cyber insurance gives you the confidence to know that should anything happen, even in this age of perpetual uncertainty and evolving cyberthreats, you can keep your clients satisfied while your business continues to grow.