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Cyber Business Interruption Insurance

How to Best Protect your Business against Cyber Threats & Interruptions

Over the last 12 months, the rise of remote work has increased cyber risk and made companies more vulnerable to cyberattacks. While businesses are becoming more aware of cybercrime risks, there is still inadequate understanding of what the risks are, and how to mitigate and insure them.

In this article, we’ve worked with CT Group to explore cybercrime and cyber insurance in 2022 – including how to mitigate cyber risk and how to address a key cyber related exposure: business interruption.

Remote Work Fuels Cybercrime

Cybercrime has been around since 1834 — when hackers breached the French Telegraph system and accessed stock market data. Since the 1830s, technology has developed exponentially, and so has cybercrime.

In a survey by McAfee, two-thirds of responding companies experienced a cyber incident in 2019. The average reported cost for each company’s most expensive breach was over $500,000.

Since 2019, the rise of remote work has only fuelled the fire. According to the Australian Cyber Security Center, cybercrime reports rose 13% in FY2020-21. Head of the Australian Cyber Security Center, Ms Abigail Bradshaw CSC, commented:

As we shifted online to go school work or work from home or buy things, or keep communicating, the criminals have also shifted and really prosecuted our online lives to make money or steal our information.

A recent Open VPN poll supports this statement. Among respondents, 73% of VP and C-Suite level IT managers believed that remote workers pose a greater cyber-security threat than on-site workers.

Companies need to accept that they are constantly exposed to the very real and increasing threat of cybercrime, and that cybercriminals are proactively and constantly trying to find ways to attack unprepared victims.

Key Cyber Risks Businesses Are Facing Now

If your business is reliant on computers to function, a cyber-related business interruption can have a massive impact on turnover. In extreme cases, malicious attacks can hinder your ability to generate income for weeks or even months.

In 2022, cybercriminals are more vicious and dexterous than ever before. And, as businesses trade static workstations for a more ‘fluid office’ the threat of cyber-attacks has increased exponentially. Today, even organisations with advanced security and firewall technology are at the mercy of cybercriminals.

Key cyber risks include:

1. Inadequate passwords:

It does not matter how secure your organisation’s secure infrastructure set-up is – humans are creatures of habit and their actions are easy to interpret. Weak passwords are an easy target for hackers. Passwords your staff should avoid include:

Passwords based on easily traceable personal data (birth dates, anniversaries etc.)

Passwords used on other platforms

Feeble passwords for example digit/letter combinations.

2. Phishing assaults

Phishing is an older attack method – but, according to a 2021 report by CISCO Umbrella, it still accounts for almost 90% of all data breaches. In a Phishing attack, the user receives communication (usually an email) that appears to be from a source they trust. The email requests personal data like passwords or security question answers, which the email’s real sender can use to access sensitive information. 

Like password-related hacks, phishing attacks take advantage of human error. What makes phishing so effective is that through the social distribution of links and files, victims often inadvertently propagate malicious content.

3. Malware

Malware, or ‘malicious software’, is arguably the most widespread form of cyber security threat. Malware causes systems to behave strangely. This includes preventing access to programs, deleting files, syphoning information to other sources, and infecting connected systems.

4. Trojan viruses

Trojan Viruses are a form of malware. They disguise themselves as legitimate, helpful software. But under the surface, they are harmful. A common ploy is to send a warning to a user saying that it detected malware in their system. They offer to scan your device, but the ‘scan’ it carries out is actually the transfer of malware.

5. Crytopjacking

A definitive sign of the times – Cryptojacking is the act of hijacking a computerised device and syphoning computing power from the machine without the official user’s knowledge. The additional power is usually used to mine cryptocurrency.

6. Ransomware and extortion

Ransomware can be described as malware’s nastier cousin. Ransomware encrypts your files in a way that is nearly impossible to remove without the necessary software codes. Organisations can be held to exorbitant ransoms to free their systems and data. Although ransomware has been around for many years, 2021 saw increased ransomware complexity. New trends include:


When an organisation’s system is seized by threat actors, and money is extorted in exchange for the release of system functionality.


When cybercriminals deprive companies of data in addition to encrypting it, allowing them to dictate greater ransom demands.


There are syndicates-for-hire that will attack large enterprises for a big payout from a third party. These are well-organised crime rings with global networks, capable of attacking large enterprises.

Supply Chain Attacks

2021 saw a stark surge in attacks on tech companies. Experts believe it’s due to the appeal of attacking software code, and then launching an attack on the company’s vendors and customers, creating a chain reaction of malicious attacks, often with the intent to collect multiple ransoms.

The risks associated with these threats are different for individuals and businesses.

Password breaches: The scale of a password breach is generally larger for a business than an individual. An organisation-wide breach can compromise the classified data, personal information or even bank accounts of thousands of clients.

Phishing: The impact of phishing depends on what information is accessed by the hacker. Individuals tend to be targeted for identity theft, while businesses tend to be targeted for bank account access.

Malware: Malware can result in the total loss of company data, or company client lists with costs running into the millions.

Ransomware: Ransomware attacks are by far the costliest. And unfortunately, they are becoming increasingly more frequent. According to Coverware, in the first quarter of 2021, there was a 43% increase in the demands from cybercriminals, averaging an extortion cost of $220k. This cost is exclusive of productivity loss, loss of system and network access, data loss, damage to brand reputation, client loss and loss of revenue. Extortion costs aside, the IT manpower and hours required to solve these onslaughts, is enormous. They can easily take weeks, if not months, to resolve and run into millions of dollars.

The below chart shows cybercrime statistics for the 20/21 financial year. It is a good indication of how prevalent cybercrime is in Australia at the moment.

ACSC Annual Cyber Threat Report - 1 July 2020 to 30 June 2021

Cyber Business Interruption – The Costs

Most businesses are aware of potential expenses related to repairing operating systems, regaining system access and addressing data breaches following a cyber attack. But, many overlook a critical exposure: business interruption.

An attack related outage can cost your business thousands in lost profits and unexpected expenses. In a survey by McAfee, in 2019 the average length of a responding business’s longest cybercrime-related interruption was 18-hours. For more than 33% of respondents, attack-related system downtime cost between $100,000 and $500,000.

Cyber business interruption examples:

In 2017 the LA Times reported that a NotPetya worm attack interrupted business at Danish shipping company Maersk for two weeks at a cost of $200-$300 million.

According to Computer Weekly, a 2020 cyber-attack left Avon representatives in several countries unable to place orders. Parts of the Avon UK system remained down more than a week after the incident.

Mitigating Your Cyber Risk & Cyber related business interruptions

In addition to understanding the risks, and insuring against them, it’s probably most important to ensure companies are preparing for, and mitigating key risks. CT Group has provided a list of tactics all businesses should undertake to manage and reduce their exposure to the growing threat of cybercrime:

Staff training: Security Awareness and Cyber Training can greatly reduce the vulnerabilities companies face, by creating awareness and helping staff carefully navigate possible pitfalls.

Enforce cybersecurity policies: Organisations must implement strict policies and set a standard of behaviour when it comes to the safe use of cyber-based company assets. Cloud-based governance infrastructure can help to monitor and maintain sovereignty over the use and exchange of data.

Inspect encrypted traffic: Encrypted channels are now commonly used by cybercriminals. Adopt cloud-native, proxy-based applications that can inspect, decode, detect, and prevent threats in all HTTPS streams, for each user.

Up-to-date software: Apply software Patch Management, which ensures that all critical security updates are deployed to the endpoints within the network in a timely manner to address new vulnerabilities and fix them as they are discovered.

Migrate to the cloud: Move your company’s operations to the Cloud to gain stricter control over network access and avoid locally stored assets. The cloud also makes limiting and granting access very simple.

Develop a response plan: Prepare for the worst with the right business insurances. Speak to your IT service provider about a data backup and disaster recovery plan and build your response strategy into your overall business continuity program.

Understand the cover your business needs: Whilst it is imperative to establish what your company’s risk status is, having a clear understanding of the different types of insurances is just as important to make the right choices. For example, having a Cyber Insurance policy is essential to provide Emergency Incident Response, Liability and Financial Loss cover after an attack, while Cyber Business Interruption Insurance exists as a breach response to make up for the income that could not be earned during the restoration period after an attack.

What Is Cyber Business Interruption Insurance?

cyber business interruption insurance

Cyber insurance is a package of coverages that respond to losses associated with a cyber attack. The package can include cover for:

Cover for stolen funds & lost data

Costs to respond to and defend legal actions related to privacy or security breaches

Costs related to restoring and re-protecting your computer systems

Incident response costs and access to 24/7 emergency response teams

Costs associated with investigating and notifying a data breach

In some — but not all — cases, your cyber policy may include business interruption cover, which is arguably one of its most important coverage sections. Similar to traditional loss events like fire or flood, having insurance to restore operations following a cyber event is only useful if the business is able to survive through the restoration period. 

The intention of cyber business interruption cover is to cover the revenue you would have earned if you had not experienced the cyber event. It can also cover additional expenses incurred to continue operating as best you can while the insurers help you recover from the loss.

If your Cyber policy does not include cyber BI cover, it is strongly recommended that you either add it to your existing policy or seek an alternative policy with more comprehensive coverages.

Unfortunately, organising Cyber BI cover is not simple. As a new and evolving form of insurance, cover terms can differ from insurer to insurer, and understanding what is best for your businesses can be confusing.

What Does Cyber BI Insurance Cover?

The insurance market has not yet settled into a standard way of covering cyber business interruption, which means policy terms can vary significantly between insurers.

Loss of income

Covers the difference between your net profit and the net profit you would have earned without business interruption.

Operating expenses

Covers ordinary operational expenses that you must continue to incur through the outage, such as rent and payroll.

Additional expenses

Covers expenses incurred for the express purpose of reducing an outage-related income loss. For example, hiring a tech expert to put a workaround in place or paying customer service staff overtime to process sales by phone.

Your policy may also include or have an option to add:

Forensic expenses

Covers costs associated with investigating the source of business interruption.

Contingent business interruption (also called dependent business interruption.)

Extends cover to situations where an attack on another company’s systems results in interruption to your business. The policy will usually require you to have a direct relationship with the company in question and would not extend to computer system failures among your customer base.

How Is Cyber Business Interruption Loss Calculated?

The way income loss is calculated will depend on your insurer and your policy. The process often includes consultation with forensic accountants and technology experts.

Some things worth noting are:

Cover will not include delayed sales

Not all revenue lost during a system failure is lost forever. If a system failure means that a customer comes back later to purchase, this is not considered an income loss.

If there is no loss in revenue, you will not be able to claim for operational expenses.

If your business generates a normal revenue during the outage, insurers expect you to cover your normal expenses. (If you incurred extra operational expenses to prevent revenue loss, you can usually claim these as additional expenses.)

The length of time for which your insurer measures interruption loss will depend on your policy.

Your policy may have a waiting period, a retention period, or limit cover to the period between when the outage occurs, and your systems are restored.

Your policy may not cover at all if the interruption is too short

Many policies will only consider a claim related to an outage over a set length. In our experience, the waiting period can be as small as 3 hours and as large as 72.

What Might a Cyber Business Interruption Claim Look Like?

It’s really difficult to say what a Cyber BI claim will look like. Terms vary significantly from insurer to insurer. And, since the settlement is often put together at the discretion of a forensic accountant. Some fictitious and slightly simplified examples of claims are below. These can help you to understand some different aspects of cover – but should not be considered representative of an actual claim. 


Your website is hit with a distributed denial of service (DDoS) attack. The service DDoS attack takes your site offline for 24 hours. The next day your lines are so busy that many of your customers get sick of waiting and go elsewhere.

Your Policy:

You have Cyber BI cover with a 12 hour waiting period. You are not covered during the waiting period or for the first $5000 loss after. Cover extends until systems are restored.


The amount you are able to claim in this case is very limited. Your policy’s aggressive retention terms and short indemnity period, mean that you can only claim for 12 hours out of your 24 hour outage. And, you can not claim for residual losses over the next few days. 


Your employee opens a personal email on their work computer. Her private email account does not have the same security protections as the work email account. Her computer is infected by a ransomware virus that spreads across your network. The virus encrypts all files, and thieves demand a ransom for the encryption key. It takes two weeks to break the encryption and fully restore your systems. As a result of the outage, a major supplier triggers the cancellation clause in an exclusive supply contract. 

Your Policy:

You have business interruption cover with a 12-hour wait period.  There is no retention period or dollar retention. Cover applies under the policy for 30 days after systems are restored.


You will be able to claim for losses during the entirety of the outage. You will also be able to claim residual losses for the next 30 days. However, if it takes more than 30 days to replace the contract you lost, there will be some out of pocket loss.

Ensuring Your Policy Is Fit-For-Purpose

Especially for complex policies like cyber business interruption, it would be extremely beneficial to work with a specialist broker who can properly review your requirements and align the best solutions to them.

A specialist insurance broker will also:

Make sure you know all the options available on the market

Explain the differences between cover types — including how they might affect a claim

Provide targeted advice based on your business requirements

Speak to insurers on your behalf to ensure optimal policy terms

Support you in the event of a claim

Final Takeaways

The rise of remote work is making businesses more vulnerable to cyber-attacks.

A broker can give you a clear picture of the cover available, explain each cover option to you, and help you make sure that the policy you end up with is the best one for your needs.

Businesses should be aware of the key risks they are facing.

Businesses should mitigate risk wherever possible.

Cyber insurance, including Cyber BI cover, is crucial for businesses in 2022.

Choosing a cyber policy is difficult because policies vary significantly from insurer to insurer.

To get your Cyber BI cover right, KBI recommends engaging a specialist broker.

Should you need more information on Cyber Insurance, please contact the KBI team on 1300 907 344 or visit our cyber insurance page

Should you need more information on Cyber Security, please contact the CT Group team on 1300 434 237 or email solutions@ctgroup.com.au


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➤ In most cases, cover is limited to a privacy or security breach. But, there are some situations where extended coverage is available for other outages.

➤ Your insurer will only be responsible for covering lost profit and additional expenses for the period agreed on in your policy. This period differs significantly from insurer to insurer, and the option you pick can drastically affect your position in the event of a claim.

Some typical timeframe based limitations include:

A waiting period before a claim is eligible: Your policy may exclude cover for interruptions that do not last longer than a specified number of hours (or sometimes days.)

A waiting period before losses are eligible: Your policy may exclude all cover for losses that take place in the waiting period and only calculate loss from the time the waiting period ends.

Cover ends when systems are restored: Your policy may consider a business interruption to be over as soon as systems are restored. If your policy limits cover this way, it will prevent you from claiming for residual effects of an outage—for example, the revenue lost in the days following an outage due to disgruntled customers.

Cover ends a set number of days after your system is restored: Some policies cover losses for a period of time after systems are restored. This allows you to claim for the residual effects of a business interruption. Still, there is no guarantee that cover will last long enough to support you until you return to normal income levels.

Cover until income is restored: Some policies include cover for the entire period of income loss. This is the most comprehensive option available but usually also the most expensive.

➤ Many policies expect the insured to cover a portion of losses. This can be called the retention, excess, deductible, or waiting period, and it might be defined as losses within a period of time, a dollar amount, or both. Like most things in Cyber BI insurance, retention details vary significantly from policy to policy.

Common Cyber BI retention terms include:

No cover for losses and expenses incurred during the waiting period

No cover for the first $X of losses and expenses

No cover for the first X hours of interruption

No cover for losses and expenses incurred in the waiting period and for the first $X of losses and costs incurred following

There is no one-size-fits-all rule. The type of cover that is right for you will depend on many factors, including your operations, your operating costs, your cash flow, the complexity of your systems, and your core vulnerabilities. In our opinion, the best option is always to consult an expert broker.

Even among companies in the same industry, needs can vary:

Take a 24-hour outage for an online store. Some stores are confident that customers will come back the next day, while others are not. Some stores will lose a single order per customer, while others will lose months of subscription or follow-up purchase income.

Have any questions?

Talk to one of our Brokers today!

About KBI

We are a specialist insurance brokerage with an emphasis on adding value to our clients by helping them make an informed decision. Our approach combines that of an insurance broker and consultant, where we focus on providing expert advice to our clients while customising their insurance program and risk management solutions.

Since starting in 2013, KBI is constantly growing and becoming a leader in the Australian market. Our primary point of difference is that we don’t try to be all things to all people.  We work in niche areas, where we can tailor an offering, advice and broker support to meet the specific area’s needs.

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