Security Series Part 2: What’s Your Cyber Liability?

In Part 2 of our Security Series, learn to assess your business’s cyber liability and security. To read Part 1 for tips about avoiding information breaches with general office security, click here

Business has changed a lot over the years. Many of us can recall a time when most companies didn’t really use computers yet now it seems like they’re central to everything we do.

With that increased reliance on computers and the internet comes increased risk. Cybercrimes are an ever-growing problem for small, midsize, and large businesses across virtually all industries. These attacks are mostly done for financial gain, either by directly stealing money or taking customer data, which is then sold to identity thieves.

The Risk for Merchants

asses your business's cyber liability and securityMerchants in particular are at risk for theft of payment information, such as credit cards. Merchants accepting payment cards are responsible for complying with the Payment Card Industry Data Security Standard (PCI DSS). Contrary to what you might believe, even when using a third-party vendor for card processing, the merchant is ultimately responsible for ensuring compliance. This means that in the event of a breach, the merchant is liable for the breach and the ensuing PCI assessment.

The Risk for Your Business

However, even if you’re not a merchant you may find yourself liable as the result of a cyber-attack. Among other things, this could mean that, in addition losing business and suffering downtime from a cyber-attack, your customers and business partners may wind up suing you for compromising their data.

Yes, as awful as it sounds, organizations of all shapes and sizes – from non-profits to small businesses to large companies – have been sued after falling prey to a cyber-attack or data breach. You may recall hearing headlines about Target suffering a data breach a few years ago. If you stopped following that story, you may not have learned that Target was subsequently involved in a series of lawsuits which resulted in some heavy settlements, including paying US$67M to Visa, US$10m to customers, and US$39m to several banks, among others. Target reports that the total cost of this data breach has been US$202m.

While your company’s losses probably won’t be as high as Target’s, the results can still prove devastating. In an extreme case, they might even put your company out of business!

Assess Your Cyber Exposure

How do you protect your company from becoming a statistic? The first step involves assessing your cyber exposure. You’ll want to ask yourself the following five questions:

  1. What kinds of propriety information do you collect, manage, or store?
  2. What kinds of confidential information do you collect, manage, or store from your clients? (Examples can include payment information, healthcare information, social security numbers, etc.)
  3. What kinds of confidential information do you collect, manage, or store from your employees?
  4. In what ways do you collect, manage, or store information? How is this information protected?
  5. Do you employ third-parties or outside vendors to handle proprietary information? Do you outsource any information technology?

Implement Security Measures

Once you’ve assessed your exposure, you can take additional measures to keep that information secured. You should also consider implementing procedures in case of a breach to help you more quickly identify what information was lost, who needs to be contacted, and so on.

Of course, one of the best ways to stay prepared for any potential cyber-attack involves buying cyber insurance. Cyber insurance is rated based on the amount of information at risk, such as the number and size of records, type of business or service provided, and revenue. While coverage can vary, most policies address both the prevention of and reaction to data breaches.

However, keep in mind that certain issues might not be covered under a policy. One such problem is “social engineering.” In the field of information technology, this refers to scams which trick people into providing criminals with either money or confidential information.

In many cases, companies have been duped out of millions of dollars by crooks who impersonated employees – including the company’s CEO – to trick their victims into wiring money to untraceable accounts. Without the proper insurance, one of these costly scams can potentially cause serious harm to a business – possibly even bankrupting it!

Many businesses today simply can’t afford to go without cyber insurance. And, if you have a cyber insurance policy, it’s worth reviewing what’s actually covered by your policy. Likewise, cyber security should be a major consideration for your organization. You wouldn’t leave your business’s front doors unlocked when you close for the night, and you should certainly avoid similar vulnerabilities when it comes to your information systems.

Resources:

For more information on topics like cyber security and privacy insurance, how to avoid coverage confusion on cyber crimes, and how cyber liability can’t be outsourced, visit our cyber liability insurance page.

If you live around the Brookfield, CT area and want to learn more about your insurance needs, be sure to give Warwick Agency a call today at (203) 775-2564.

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