FOR IMMEDIATE RELEASE
For IT Contractors, Educating Clients on the Value of Risk Management Essential to Securing Adequate Compensation
TechInsurance issues a three-step guide for IT contractors to educate clients about the importance of investing in professionals with adequate risk management protections.
Chicago, IL——Ongoing fallout from the 2008 recession combined with uncertainty regarding employer requirements under the Affordable Care Act mean that more companies and public organizations than ever are relying on contractors, temporary workers, freelancers, and consultants to keep employment costs low.
But this increased focus on minimizing cost means that many companies are unwittingly exposing themselves to devastating security risks, as the Edward Snowden NSA leaks illustrate, according to a new briefing from TechInsurance, the nation's leading online insurance agency for small IT businesses. Still, many independent IT contractors find themselves competing on price for the most lucrative contracts with major corporations and government entities, which means it's up to these contractors to educate larger organizations about the importance of hiring contractors who maintain Professional Liability Insurance.
"Hiring an IT contractor without adequate liability insurance is like buying a car with no seatbelts or airbags," said Ted Devine, CEO of TechInsurance. "But too many project managers are unaware of the hugely expensive data breach fallout that can result from cutting costs in data security, so they cut costs by hiring IT contractors without adequate protections in place."
Devine added that, in the event of a data breach caused by a contractor without adequate risk management safeguards, the hiring company is the one whose reputation is tarnished in the public eye – but companies often don't realize this potential for financial and reputational loss. This lack of awareness means it's essential that contractors competing for projects be proactive about educating the companies with which they hope to work.
Educational efforts should address the cost of best-of-breed antivirus protections and commercial insurance policies (including Cyber Liability Insurance and Errors & Omissions Insurance). Because these risk management measures are essential, fixed costs, IT contractors who invest in them can charge higher rates – and that can lead to sticker shock for project managers used to seeing bargain-basement rates.
To help IT professionals secure contracts at pay rates that allow them to finance essential business protection, TechInsurance recommends following three steps.
- Speak the project manager's language. Risk management measures like business insurance are essential to protecting the revenue of IT contractors, but may seem like an unnecessary cost to project managers. When convincing those with budgetary and hiring powers of the value of risk management measures, IT contractors should detail specific points in the process where information could be compromised and the specific financial and reputational impact such a compromise could have on the company.
- Come to the table with numbers. In 2012, the average cost of a data breach was $5.4 million. Surveys of businesses regularly find that more than half have experienced at least one data breach in recent months. But the Ponemon Institute's 2013 Cost of a Data Breach Study found that companies with a response and risk-management system in place greatly reduce their data breach costs.
- Use real-life examples. If nothing else, events surrounding Edward Snowden's leaking of NSA records provides IT contractors with a valuable argument for the potential ramifications of insufficient security measures. A brief scan of headlines provides further examples to illustrate the kinds of costs insufficient risk management can cause a company.
TechInsurance is the nation's leading online insurance agent for small and micro businesses (those with 10 or fewer employees). Since its launch in 1997, TechInsurance has provided a convenient online destination where IT and technology consultants, contractors, and business owners can find essential liability insurance coverage from top-rated providers by completing an application process that takes only a matter of minutes. In addition to offering third-party Cyber Liability Insurance policies, TechInsurance offers General Liability, Property, and Workers' Compensation Insurance. For more details about TechInsurance, visit the company's website at http://www.techinsurance.com.
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Mark Meadows, Propllr LLC
302-353-8258, [email protected]