The Center for Strategic and International Studies has issued a report on the total cost of cyber crime, and what it found is astonishing. According to the Washington Post, this report (sponsored by McAfee) estimates that the cost of cyber crime is roughly one percent of global income – that’s $445 billion.
To put it in perspective, cyber crime costs are now approaching the annual economic damage that drug trafficking does to the worldwide economy.
As an IT professional, you're on the front line of this effort – and your clients are there with you. You're responsible for protecting their data from all kinds of threats, many of them unseen and hard to defend against.
While you're aware of the ongoing to struggle to protect data, your clients probably don't have the same understanding. To them, cyber security is a bit of a boogieman. They're afraid of a cyber attack, but not sure how real the threat is. Studies like this emphasize that not only is this threat real, but it's downright expensive.
AT&T Data Breach Shows Threats Can Come from Anywhere
Threatpost reports that AT&T became the latest data breach victim when a contractor it hired accessed customer records in an attempt to gain unauthorized access to customer phones. For a small IT business like yours, there are two takeaways:
- Hiring outside contractors and third parties – while necessary – can expose your whole organization to risk. See "What Insurance Do Your Independent Contractors Need?" for more on how to cover this risk.
- Your clients' data could be exposed (and you could be liable) even when you contract with a big-name company like AT&T to provide services to your clients.
In the last year we've seen outages, data breaches, and major security flaws in companies ranging from AT&T to Microsoft. We've also seen contractor and vendor security weaknesses lead to hacks at big companies like Target and the New York Times.
The reality about this cyber war is not just that it's everywhere, but that liability (the blame) for security flaws spreads quickly. IT professionals like you can be sued if you recommend a contractor whose mistakes (or malicious behavior) lead to a data breach. Clients can even sue you if you recommend a third-party service that has to shut down after a DDoS or other cyber attack.
You face the risks of cyber attacks on your client's networks as well as those that occur on the networks of your clients’ vendors, web hosts, and other service providers. When you begin to see cyber crime for what it is – a network of interconnected risks, liability, and attacks – it's easy to see why the total costs drag down the worldwide economy.
Protect Your IT Business from the Cost of a Cyber Attack
If a client is hacked or targeted by a cyber attack, you can be liable for all kinds of damages, including…
- Lost profits.
- Repair costs.
- Data breach investigations.
- The cost to contact customers.
- Damage to your client's reputation.
- Crisis management costs.
Because of the high cost of a data breach, clients often sue their IT contractor to recoup the expense. This is precisely why E&O Insurance is so important for IT companies.
Errors and Omissions Insurance covers data breach and identity theft lawsuits, paying your lawyers’ fees, settlement costs, and damages you owe your clients.
For a free quote on IT Insurance that can protect you from the staggering costs of data breaches, submit an online insurance application.