Forbes reminds business owners that cyber security is an issue that has to be addressed at the top levels of a company. CEOs need to be engaged in discussions about company security, Data Breach Insurance (aka Cyber Liability Insurance), and increasing investments in IT.
Many clients may plan to upgrade IT and bring their cyber security standards up to par this year. But if their business isn't truly prepared to institute data security training and company-wide policies, they probably won't make the kind of significant improvements they're looking for.
Because IT security has to be organization-wide, let's go over some of the strategies your clients can employ at the board level and below to secure their data.
Getting a Client's Board On Board with Data Security
The 2014 Cost of a Data Breach report from the Ponemon Institute found that the financial losses caused by data breaches can be cut by 17 percent when a company employs a data security strategy and appoints a CISO – chief information security officer.
Why does having a security-focused board member matter so much? Having a data security spokesperson on the board will…
- Help earmark IT items in the company budget and guarantee data security gets proper funds.
- Create a point person for questions about data security.
- Increase the likelihood the company invests in Data Breach Insurance and takes other measures to prepare for the cost of a data breach.
- Send a message to the rest of the organization that security is a top priority.
Whether your clients run a small or large business, it's easy for cyber security to be put on the back burner. By appointing a CISO, clients make sure the board is always discussing data security and future IT investments.
This is also a great move from an IT sales perspective. Businesses will be more likely to spend on IT when they have a board member who oversees their budget. As an IT consultant, you can connect with the CISO and put your business in position for future contracts.
When Clients Invest in IT, You Need to Cover Your Professional Liability
Before we go over an IT consultant's professional liability and what insurance you need to cover your cyber security risks, let's look at a recent example of a data breach.
If you're tired of hearing about the Target data breach, imagine how Target's IT department must feel. And it's not getting any better for them. The St. Paul Pioneer Press reports that a judge ruled that Target's customers can move forward with their lawsuits.
Before a big class-action lawsuit, a judge will listen to preliminary arguments to see if there is enough evidence for the lawsuit. In this ruling, the judge dismissed Target's arguments and saw clear reason to believe that its customers could seek damages. But here's the thing…
The lawsuit won't actually take place until 2016. What will happen in the interim? Target will amass huge legal expenses as it prepares for the suit and may even choose to settle out of court with millions of hacked customers rather than duke it out in court.
Data Breach Lawsuits and Professional Liability Insurance for IT Consultants
What does this mean for IT consultants? Lawsuits are extremely costly and time consuming. If your client suffers a data breach, their customers' lawyers will rush to file lawsuits. Your client could be out thousands of dollars in legal fees and damages.
This is why you'll need Professional Liability Insurance (also called Errors and Omissions Insurance). After your clients are sued, they'll look to sue the IT consultant who installed their software that was vulnerable in the attack. Many IT consultants invest in Professional Liability Insurance because it can cover the cost of client lawsuits.
E&O Insurance typically costs between $700 and $1,200 in annual premiums for an independent consultant working in IT. While costs vary according to the size of your business, the coverage is affordable, sometimes costing less than a smartphone bill.
As your clients look to upgrade their data security, don't forget to cover your increasing professional liability risks. Use TechInsurance's online insurance application for free Professional Liability quotes.