Consumers and Business Owners are Underprepared for Evolving Cyberthreats

Wednesday, October 21st, 2020

As COVID-19 drives more Americans to turn to virtual or digital business interactions, cyber criminals have found fertile hunting ground for new opportunities to exploit weaknesses. According to a new Nationwide Agent Authority survey, many American consumers and businesses are dangerously underprepared to defend against common and evolving cyberthreats.

"Our survey highlights concerning vulnerabilities for consumers and small business owners, many of whom may be more focused on keeping their family or business afloat in tough times, as opposed to guarding against cybersecurity threats," said Catherine Rudow, Vice President of Cyber Insurance for Nationwide. "It's encouraging that middle market business owners appear to be more attune to risks and are proactively preparing their defense. But regardless of the type of client, now is an important time for insurance agents to talk to their customers about cybersecurity solutions and best practices."

Nationwide's research uncovered four key themes:

  1. Small business owners are underprepared and overconfident
  2. Middle market business owners have a better handle on cyberthreats
  3. Consumers underestimate their cyber risk exposure
  4. Agents are vital and can help clients understand cyber risks, including new and evolving threats

Small business owners don't recognize cyber vulnerabilities

Nationwide's research highlights an opportunity for agents to deliver counsel that small business owners may not know they need. Though nearly half of cyberattacks are aimed at small businesses, only 37% of small business owners reported believing they are at risk to fall victim to a cyberattack. Alarmingly, about one-third also said they are not confident they could recover if their business was attacked.

While nearly half of small business owners believe they are prepared to handle a cyberattack, only 39% of independent agents believe that their customers are prepared to prevent one. Only 17% of small business owners, or fewer than 1 in 5, say they have cyber liability insurance, and half (53%) say they do not offer cybersecurity training to their employees

Approximately 8 in 10 agents say many of their clients are unsure of how they are exposed to cybersecurity risks, they don't know what is covered in a cyber insurance policy, they lack knowledge, and they believe the chance they can fall victim is small.

Quick tip for agents

  • Make sure cybersecurity is part of your next conversation with small business clients. If they are part of the 83% without cyber insurance, bring some options to the table.

Middle market business owners have firmer cyber-footing

Nationwide's research shows that middle market businesses, which typically have more sophisticated operations, have a greater awareness and are more prepared for cyberthreats compared to small businesses. Seven in 10 (70%) middle market business owners are concerned about a cyberattack, and 79% feel they are well prepared to address an attack. They are also confident in their ability to recover from an attack (80%).

This confidence may be warranted as they are more likely than small business owners to have taken key security precautions, including purchasing cybersecurity insurance (71%). They also appreciate the support they are receiving from agents, with 7 in 10 (70%) indicating they trust their agent to provide insurance council on cyberthreats.