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Death and Taxes... And Data Breaches?

Death and Taxes... And Data Breaches?

Data breaches are now as much a fact of life as death and taxes. Minimize the damage your next data breach causes your business with these three steps.

Friday, January 10, 2014/Categories: business-liability-insurance

Once upon a time, the only things that were sure were death and taxes. But as more and more top-tier companies (including Apple, the New York Times, LinkedIn, and Zappos) announce that they've been hacked, analysts have taken a new stance: today, the only things that are sure for business owners are death, taxes, and data breaches.

Makes you kind of miss the old days, doesn't it?

Minimizing the Impact of Data Breaches

So what can a small-business owner do to ensure that, when a data breach does happen, it causes minimal damage to the bottom line? Start by implementing a few best practices.

  • Put preventative measures in place. I know what you're thinking: "Hold up, Brenna. You just said data breaches are a sure thing. Why bother trying to prevent them?" Good question, dear reader. Think of it like sunscreen: if you're going to the beach, you're going to get some color no matter what. Sunscreen keeps it in the safe zone and minimizes your risk of cancer down the road. Similarly, digital security measures (including tough passwords, anti-virus software, and tiered access to sensitive information) can help contain any data breaches that do happen, limiting the extent of data exposure and financial damage done.
  • Notify your clients ASAP. Yes, this can be embarrassing and unpleasant. But Law360.com recently quoted data security attorney Scott Vernick as saying that one of the biggest consumer complaints he heard about data breaches was that companies kept mum about them for too long. So if (when) you're hit with a data breach, let your clients know right away, and update them regularly about what steps you're taking to fix the situation. Over time, your commitment to communication will help regain your clients' trust. (Note: a Bloomberg Businessweek article last month noted that lots of small-business owners are skipping the tell-your-clients step - and that this trend needs to stop.)
  • Invest in Data Breach Insurance. Data breach incidents can be expensive (in 2011, the average cost of a data breach was $5.5 million). Luckily, you don't have to squirrel away your earnings to cover the costs associated with a hacking incident. Data Breach Insurance (also called Cyber Liability Insurance) covers the costs associated with a data breach incident (including court costs and attorney's fees, which can be hefty in and of themselves), so that when you're hit, you can focus on getting your business back on track rather than on tracking down the funds you need to pay your lawyer.

Ready to tie down a Data Breach policy to keep your company's funds safe? Talk with a TechInsurance agent about your coverage options today.

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