With each year that goes by, businesses are becoming more and more reliant on technological developments and how they streamline business processes. From big e-commerce corporations to the small clothing boutique that keeps an electronic record of customer information, almost every business uses computers, software and various other technological innovations to perform daily operations. But as wonderful as these developments are, they also unfortunately open up businesses to an assortment of cyber risks.
What is a cyber risk? A cyber risk is the potential for electronic equipment to fail and for sensitive electronic data to be stolen and/or leaked, resulting in expensive cleanup tactics. Cyber risks come in many forms, often resulting in the liability of your business to take care of such threats. Here are some examples that your business might face:
- A new installation corrupts your customer database
- A hacker steals and leaks secret strategies or customer credit card information
- A power surge after a storm causes computer equipment to fail
- An employee accidentally leaves a work laptop in a public place and it’s stolen
- An employee commits fraud internally
Remember the Target scandal last month where 40 million customers became at risk for identity theft following a data breach? Though not all cyber risks are at that large of a scale, many of these instances can result in damage control efforts and lawsuits that can easily add up to exceed six figures. While this may only put a chink in the armor of larger businesses, it could be devastating for smaller businesses (particularly if they don’t have IT departments to act as a first line of defense).
Even with firewalls and anti-viral software, over a third of all businesses experienced some sort of data breach last year. In order to protect your livelihood, it’s best that you do two things. First, have IT professionals equip your business with server protection and firewalls that meet industry-standard security best practices. Second, purchase cyber liability insurance to protect yourself for potential data breaches.
Cyber liability insurance should be considered by any business that retains sensitive electronic information and equipment. These businesses include online retailers and marketers, financial institutions, technology companies, law firms, healthcare professionals, schools/universities, etc. This coverage offers protection from the expenses associated with being held liable for both internal and external data breaches, which can cost your business financially, ruin your business’ reputation and scare off previously loyal customers. What exactly are the costs associated with a data breach? Depending on the circumstances of the breach, you may be responsible for paying for the following:
- Containment and patching the source of the breach
- Customer notification
- Replacement of lost/corrupted data or equipment
- PR and crisis management
- Business interruption
- Fines associated with cyber terrorism, extortion and libel/slander
- Legal fees for defense
The small cost of cyber liability insurance is justified by the amount of protection it offers, which can be the difference between bouncing back and closing business doors permanently. Ask your agent if this coverage is right for you today!