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E-Discovery Firm’s Growth Highlights Growing Cyber Liabilities All Around

E-Discovery Firm’s Growth Highlights Growing Cyber Liabilities All Around

As the amount of data grows, so does IT liability. Find out which 4 data liabilities can lead to lawsuits for DBAs, big data firms, and other IT professionals.

Thursday, August 28, 2014/Categories: cloud-security

One of the reasons we see an increasing number of large data breaches is simply because there's more data now than ever before. This data explosion is producing a growing market for IT companies that specialize in managing, sorting, and combing through data.

When you work closely with a client's data, what kind of risks do you have? It's a great question. To understand how an IT professional's data liabilities have increased, let's look at a company that specializes in data research.

The Washington Post profiles Logikcull, a District-based data company that helps lawyers and government offices search through gigs and gigs of data to find documents they're looking for.

Like many IT companies, Logikcull is responsible for protecting its clients' data. This is one of the company's main professional liabilities (see Professional Liability Insurance for info on covering this exposure). Any mistakes or security breaches could lead to expensive IT lawsuits.

As we take a closer look at what Logikcull does, we'll focus on the four data liabilities that IT consultants share with the company.

Data Query: What Can IT Companies Be Sued For?

Logikcull specializes in helping law firms and government agencies find documents they need for lawsuits, Freedom of Information Act requests, and other e-discovery.

Law firms spend thousands of dollars each year on electronic discovery – the process of finding contracts, evidence, and documents and submitting it to the opposing counsel. In a lawsuit, one side will request pieces of information and records from the other. Though it seems like a fairly straightforward task, it's extraordinarily time consuming when you have hundreds of gigs of documents.

By using their cloud servers, indexing data, and performing searches for their clients, Logikcull makes e-discovery much less stressful. But, like you, data-focused companies are exposed to some serious IT liabilities.

Here are the four data liabilities that IT consultants, DBAs, and other tech professionals need to know:

  1. Cloud liability. Storing data on the cloud doesn't come without risk. A cloud service provider could fail to encrypt data properly (e.g., when passing it between servers), suffer an outage, lose data, or have other issues that could cripple resources and lead to disputes with clients.
  2. Third-party risk. IT companies don't work alone. You hire subcontractors and outsource parts of IT infrastructure to other companies. If there's a problem with your servers, SaaS, third-party software, mobile apps, or other outside resource, you could wind up facing a lawsuit from a dissatisfied customer.
  3. Data breach liability. When you handle a client's data, you're liable for protecting it from cyber criminals. Any breach of your client's data (because an employee mistake or a cyber attack) could lead to a costly lawsuit. After a breach, you can be liable for damages to your client's reputation, lost sales, and the cost to repair and monitor the breach.
  4. Professional errors. Say Logikcull didn't properly index a document and a client was not able to find it. For a law firm, this error could be devastating. If a law firm doesn't provide all the evidence it should have, the case could be ruled a mistrial. The firm could sue their IT provider for hundreds of thousands of dollars for damages to their reputation.

IT Risk Management: Covering Data Liability

As an IT professional, you are responsible not just for the performance of your IT solutions, but also for the security of your clients' data. As the amount of data continues to grow, so will your IT liabilities.

To manage your risk, you need a strong approach to data security and adequate Professional Liability Insurance (aka E&O Insurance). IT insurance covers the cost of tech lawsuits, including the four data liabilities we outlined above.

To learn more and receive free quotes on IT insurance, submit an online insurance application.


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