A single click can cost a small business dearly in damages and cybersecurity recovery. As we kick off Cybersecurity Awareness Month, business owners should take three steps to strengthen their operations: identify vulnerabilities, adopt proactive plans to address emerging threats, and build a risk management strategy that protects them even when a hacker succeeds.
Cyberattacks are no longer a problem reserved for major companies or IT departments. Small businesses increasingly fall victim to scams, hacking, and phishing as they rely more heavily on digital payment systems, online customer databases, and cloud software. As businesses continue to increase reliance on technology, owners need to ensure they safeguard themselves and employees. It’s important to make sure passwords are strengthened, software remains up-to-date, and everyone is trained in responsible actions. Unfortunately, no matter how much a business prepares itself, there is no guarantee that they won’t fall victim to a cyber attack. Thus, it becomes equally important to ensure it can recover from any resulting loss or damage from such an attack.
A cyberattack can shut down operations entirely, interrupt revenue streams, or compromise sensitive information. Traditional cyber insurance exists, but its policies typically carry high deductibles, significantexclusions, and coverage limits. Because scams evolve faster than commercial insurance products can adapt, newly emerging risks often go uncovered. Larger corporations have the resources to defend against attacks and recoup their losses, but small businesses rarely have those additional layers of protection.
Section 831(b) of the tax code provides exactly that. Through the implementation of an 831(b) plan, also known as a micro-captive insurance plan, small businesses can self-insure risks that traditional insurers may not cover. A properly structured plan provides these businesses the ability to set aside pre-tax dollars to utilize against future fortuitous risks, including cybersecurity, among many others.
These plans are a proven benefit for businesses that would otherwise be scrambling for cash or fighting their insurer for payment when they could instead get straight to work fixing the problem. By empowering ownersto take risk management into their own hands, 831(b) plans can save countless small American businesses.Congress should be making this tool more accessible to small businesses, not further limiting it.
By issuing clear rules and policies for 831(b) arrangements, Congress can strengthen our nation’s small businesses and, in the process, our economy. Cybercriminals don’t wait for small businesses to be ready, and Washington shouldn’t either.
This Cybersecurity Awareness Month, lawmakers should support policies that preserve Section 831(b) as a legitimate risk-management tool, empowering small businesses to protect themselves against the threats of tomorrow.
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About Dustin Carlson
Dustin Carlson is the president of the 831(b) Institute and leads the charge in education, advocacy, and innovation within the 831(b) micro-captive industry.
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