Today, companies would never think of operating without property and casualty insurance. Yet, everyday companies are ignoring a risk that has the potential to cause just as much financial damage and even impact future viability.
Small businesses are much more likely to be hit by a cyber attack, and are less resourced to deal with one. When a company has a breach, restoring data is not the only expense that will occur. Below are five common exposures that can incur after a breach:
Five Financial Exposures Small Businesses Face After a Cyber Breach
1. Notification Costs
There are 46 U.S. states that have adopted a breach notification law. The laws generally apply to all companies that own, license, store or maintain certain sensitive personally identifiable information (“PII”).
2. System Recovery
Recovering data can be expensive. Recovery strategies should be developed for Information technology (IT) systems, applications and data. This includes networks, servers, desktops, laptops, wireless devices, data and connectivity.
If a data breach results from your business’ lack of compliance regulatory guidelines, the government will levy substantial fines. In many cases, small companies may not have known they’ve violated a law or statute.
Small companies will be responsible for costs incurred by customers and vendors as a result of a cyber breach.
5. Class Actions
Class action lawsuits are less prevalent against small companies, but they do exist. There are class action cases on record of stolen customer data.
Today, business owners can protect themselves by purchasing cyber liability insurance. Cyber liability insurance can provide peace of mind for any company, in any industry. In recent years, the cyber liability insurance market has expanded greatly and there are policies available for any size company. The coverage provided is broad and tailored to each company’s needs.
For business owners to operate their company with peace of mind, cyber liability insurance should be considered an essential part of their firm’s insurance portfolio and risk management strategy.
Excerpt from Small Company Cyber Hazards Hiding in Plain Sight