Why Logistics Firms Need Cyber Insurance
Coversure Castle Donington
The UK's leading independent specialist haulage, logistics, and construction plant insurance brokers.
?Cyber Insurance For Logistics Firms: Protection Against A Growing Threat
If you own a logistics, haulage, or truck business, you’ll know how important it is to have high-quality?truck insurance.? Not only is it a legal requirement, but with options such as public liability and truck breakdown insurance, it can provide comprehensive protection for your business.? There is, however, a new threat that it cannot protect logistics firms from, a threat that’s already costing the UK economy over ￡27bn per year*.? That threat is from cyber-attacks, and it’s one that’s making more and more logistics businesses look for a cyber insurance quote.
Cyber-attacks on small and medium-sized enterprises (SMEs) are on the rise in the UK.? Research from Hiscox has revealed that 53% of businesses suffered a cyber attack in 2023, up from 38% in 2022.? With the government putting the average cost of a successful cyber attack on businesses at ￡15,300, this is a potentially costly as well as growing problem.??
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Many people in the logistics industry will remember how KNP Logistics, home to well-known brands such as Kings of Old, was forced into administration following a successful cyber attack.? KNP was hit by an Akira ransomware attack in June 2023.? This resulted in its insolvency and the loss of 730 jobs.
At the time a National Cyber Security Council (NCSC) spokesperson said, “Ransomware is one of the most significant cyber threats facing the UK and attacks can have a far-reaching impact”, something KNP Logistics learned to their cost.? Sadly it was a cost that they could have borne had they had cyber insurance in place.? While insurance cannot prevent cyber-attacks, cyber insurance can offer logistics firms vital financial support should their business be successfully attacked.
Why are logistics businesses so vulnerable to cyber attacks??
In a drive for speed and efficiency, the logistics industry has been quick to embrace digital technology.? This has given rise to logistics marketplaces such as TIMOCOM, SpaceFill, and Lobb. ?These marketplaces store vast volumes of personal and corporate data and are accessed by tens of thousands of users each day.? And that is where the weakness lies.??
According to IBM, the cause of 95% of successful cyber attacks is human error.? And with only 1 in 10? UK transport firms having trained their staff in cyber security (source: Indusface), the door is often open for cyber criminals to step in and wreak havoc.? To make matters worse, in the transportation industry, the average cost of a data breach reached ￡3.27m by 2023, according to?IBM.
What is cyber insurance?
Cyber insurance protects businesses financially should they be targeted by hackers or malicious software and suffer damage or data loss from their IT systems and networks.? A typical policy covers incidents such as having system access held for ransom by ransomware, its system being infected with malware, losing money in a phishing scam, or if its system infects another business and they are sued for damages.
What can cyber insurance cover?
Cyber insurance can offer logistics and haulage firms a wide range of financial protections, including:
??????? Data recovery – specialist IT services can get some or all of your data back.? Cyber insurance can cover the cost of their fees.
??????? Customer notifications - businesses are usually required to notify their customers of a data breach, especially if it involves the loss or theft of persoanally identifiable information (PII).? Cyber insurance can help cover the cost of this process.?
??????? System restoration – cyber insurance can cover the cost of restoring and securing your systems after a breach.
??????? Paying ransomware demands – cyber criminals often ransom a business’s systems and data, refusing to allow them access until the ransom is paid.? Should this happen, your cyber insurance policy will cover the costs of these demands.
???????? Legal expenses – if an attack leads to a loss of data or if it infects another organisation's systems, you can be left open to legal action and compensation claims.? Cyber insurance can cover the cost of defending the case and any compensation awards that may follow.
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??????? Forensic investigations – these aim to reveal how the attackers got in and what needs to be done to prevent the problem from occurring again.
??????? Business interruption – should the attack mean you are unable to trade – if, for example, you are locked out of your system – then business interruption insurance will provide you with an income until you can get back to normal.? While a typical policy will give you 12 months of cover, many insurance experts now believe that 24 months is a more appropriate period.
??????? Reputation management – cyber attacks can have wide repercussions and affect customers and suppliers.? Effective reputation management can help keep third parties informed and protect important business relationships.
???????? Cyber attack prevention – as the threat has grown and the costs of claims have escalated, some insurers now offer policyholders access to cyber security experts when they take a policy out.? These specialists can undertake system vulnerability assessments and staff training to help prevent a successful attack.
What are the most common types of cyber crimes?
While there are a variety of ways that cybercriminals and scammers try and gain access to systems, the most prevalent cyber crimes are:
1.???? Phishing - one of the most common forms of social engineering scams, these use supposedly trusted sources to trick people into passing over information.? Once upon a time, these attacks were largely confined to emails, but fake social media presences and cloned websites are increasingly being used, too. ?AI is making phishing attacks all the more plausible and easy to fall for.
2.???? Malware – malware is a form of malicious software that either seeks to damage an IT system or open the door to another form of damaging software, such as ransomware.
3.???? Ransomware – ransomware is?a type of malware that locks and encrypts a victim's data, files, devices, or systems, rendering them inaccessible and unusable until the attacker receives a ransom payment. ?As we saw with KNP Logistics, the effects of this type of attack can be ruinous.
4.???? Compromised identity attacks – these arise from hackers gaining legitimate users’ details and can be extremely hard to detect.? These attacks can be performed in several ways, including credential stuffing.? Credential stuffing works on the basis of people using the same credentials – email and password – for multiple applications, so once they have one login, they can access many applications.? This is another reason why using the same username and password for multiple log-ins is such a security risk.
5.???? Code injection attacks – these involve a hacker injecting?malicious code?into a vulnerable computer or network to change its course of action.? This is just the sort of vulnerability that the preventative action element of a cyber insurance policy can help logistics businesses identify and prevent. ??
Like some cyber insurance help?
?Cyber-attacks are a significant and growing problem for the UK’s transport and logistics businesses.? Worryingly, many do not see the scale of the threat or the devastating effects it can have on their business.? But with AI making attacks more effective and more attacks being launched, cyber-attacks are something that logistics and haulage firms need to take seriously.
?Cyber insurance can provide cost-effective financial protection should your business be attacked, and can even help prevent you from falling into the hands of these online criminals through training.
?If you’d like to know more about how cyber insurance can protect your logistics business, then call the logistics insurance specialists at Coversure Castle Donington on 01332 983 725, or contact us here.
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