Why Cyber Risk Is No Longer Optional for SMEs
Cyber risk is no longer emerging.
It is established, well understood, and, in the eyes of insurers, unavoidable.
For many organisations, cyber incidents are now viewed in the same way as fire, theft, or flood: not a question of if, but when and how well prepared they are to respond.
Yet many SMEs continue to manage cyber risk as if it were an optional extra, a technical concern rather than a core operational one. In practice, this often means controls are partial, policies are bolted on late, and resilience is assumed rather than tested.
The result is a growing disconnect between how cyber risk is assessed by insurers and how it is still perceived inside many businesses.
It is established, well understood, and, in the eyes of insurers, unavoidable.
For many organisations, cyber incidents are now viewed in the same way as fire, theft, or flood: not a question of if, but when and how well prepared they are to respond.
Yet many SMEs continue to manage cyber risk as if it were an optional extra, a technical concern rather than a core operational one. In practice, this often means controls are partial, policies are bolted on late, and resilience is assumed rather than tested.
The result is a growing disconnect between how cyber risk is assessed by insurers and how it is still perceived inside many businesses.
The risk isn’t new, the consequences are
Most cyber incidents affecting SMEs in 2026 are not sophisticated breaches. They are:
• Email compromise
• Payment diversion fraud
• Credential theft
• Ransomware triggered by basic vulnerabilities
What has changed is the speed, automation, and credibility of attacks, often powered by AI.
• Email compromise
• Payment diversion fraud
• Credential theft
• Ransomware triggered by basic vulnerabilities
What has changed is the speed, automation, and credibility of attacks, often powered by AI.
Why insurer expectations have hardened
Insurers now expect SMEs to demonstrate basic cyber hygiene, including:
• Multi-factor authentication
• Regular patching and updates
• Secure, tested backups
• Clear internal payment controls
• Staff awareness of phishing tactics
This isn’t about being punitive, it’s about removing the most common entry points.
• Multi-factor authentication
• Regular patching and updates
• Secure, tested backups
• Clear internal payment controls
• Staff awareness of phishing tactics
This isn’t about being punitive, it’s about removing the most common entry points.
The maturity gap
There is now a clear gap between:
• How cyber risk is assessed by insurers
• How many SMEs still perceive and manage it
This gap increasingly shows up through:
• Higher premiums
• Restricted cover
• Larger excesses
• Declined claims where controls were absent
• How cyber risk is assessed by insurers
• How many SMEs still perceive and manage it
This gap increasingly shows up through:
• Higher premiums
• Restricted cover
• Larger excesses
• Declined claims where controls were absent
Cyber insurance is not a substitute for hygiene
Insurance is a vital backstop, but it works best alongside sensible controls.
SMEs that combine:
• basic technical safeguards
• staff awareness
• and appropriate insurance
experience fewer incidents and far better outcomes when something does go wrong.
SMEs that combine:
• basic technical safeguards
• staff awareness
• and appropriate insurance
experience fewer incidents and far better outcomes when something does go wrong.
Final thought
The question is no longer “Do we need cyber insurance?”
It’s “Are we organised enough to qualify for the protection we expect?”
That’s where good advice, and a broker who understands both risk and insurer appetite, makes a real difference.
