If you’ve watched the news in the last few months, you already know cyber events are no joke. Recent ransomware attacks, including at Colonial Pipeline, have significantly impacted critical infrastructure and supply chains, resulting in millions of dollars in losses.
These cyber events have reached such a scale and severity that even the White House has urged businesses to step up their security measures. On May 12, the White House also issued an executive order on improving the nation’s cyber security.
This article outlines common exposures companies face as well as a checklist of privacy and compliance requirements and training, insurance coverages, and risk mitigation resources businesses can implement to protect themselves before a cyber event happens.
For businesses large and small, compliance with federal, state and foreign privacy laws and regulations has become an essential obligation. These laws govern a company’s collection, storage, use, sharing and disposal of personally identifiable information (PII), protected health information (PHI) and payment card information (PCI). A company’s inadvertent failure to abide by these laws, or its failure to timely and fully disclose how it performs such tasks, can make it a target for regulatory proceedings and civil class actions. These lapses can also be a source of reputational damage.
Employment and consumer-related risks and exposures also have become more prevalent, particularly under the Americans with Disabilities Act (ADA). An organization’s web presence needs to be accessible to all, including those with disabilities.
Failure to protect private information can also lead to consumer class actions. And, organizations could be presented with shareholder suits if the value of an organization is harmed due to a cybersecurity event.
These stats put into perspective just how devastating a breach can be on a business.
In short, the risks are real, particularly for small and medium-sized firms which typically do not have the robust cybersecurity protections of larger companies.
Use this checklist to ensure adequate risk mitigation and protection for businesses of all sizes.
1. Don’t ignore data security and privacy compliance.
While the requirements for each business will be different, there are some general practices to follow:
2. Purchase a broad cyber liability insurance policy.
Work closely with your wholesale insurance broker to evaluate the coverage your client currently has, what they need based on their business’s unique risk factors, and the insurance coverages that they’re contemplating buying or not buying. Key coverages include:
3. Take advantage of additional loss mitigation services provided alongside the cyber liability insurance policy.
These services can include:
In today’s world, risk transfer alone isn’t enough to protect a business from the implications of a cyberattack. The right combination of a well-placed cyber liability insurance policy, compliance knowledge and review, employee training, and loss mitigation services are an effective approach to reduce a company’s cyber risks and potential exposures.