What is Cyber Liability?

Today’s technology has changed the way we do business. There is no question about that. Almost every business has a website where it builds brand recognition, tells the story, shows the product or even sells product or service. Each company also has both its internal and external e-mail for dissemination of information and serves many companies as a primary source of communication. With these tools in place, does this create a liability or exposure that was not there before? Let’s look at some examples of what could go wrong:

• While e-mailing a customer, your employee inadvertently spreads a computer virus that causes that company to halt productivity
• Sensitive client information is hacked into and compromised
• Your online store’s security is compromised and client credit card information is taken
• A third party feels you have infringed on their copy written material
• You have a rogue employee that due to their internet communication creates liability for the company

So what can a company do proactively to protect against these risks? From a management standpoint there are a number of steps that should be taken, which include:

• Build in redundancy in your technology system
• Have clear policies and procedures related to company communications
• Encrypt sensitive information
• Manage the content of your website tightly
• Closely vet any third party online payment providers

While managing the risk is a great first step, transferring that risk with an insurance policy should be considered. Cyber Liability is an insurance coverage that has been around for over 10 years and is becoming more important as we continue to rely on technology solutions to reach our current and prospective clients. With federal and state mandated notification laws getting stronger, the need for this coverage continues to increase.

The strength of the internet and the ability to reach a wider audience increases both the opportunity for new clients and the need to protect what we build as business owners.

Tony Johnson is an Accredited Advisor in Insurance and can be reached at Davidson Insurance, 360-514-9550 or Tony [at] Davidsoninsurance [dot] com