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As Data Privacy Concerns Mount, Perhaps You Should Consider Cyber Liability Insurance

By Ted Devine, Last Modified
Oct 16, 2018
> Business Basics

Small business owners' confidence in social media continues to fall following a recent data breach in which hackers compromised the accounts of over 50 million Facebook users. The latest breach represents a major blow to Facebook, which is still struggling to regain the trust of its users following the Cambridge Analytica scandal earlier this year.

A recent joint survey conducted by Insureon and Manta found nearly half (44 percent) of all small businesses no longer trust Facebook to protect their business's data. One-quarter of survey respondents also reported exercising greater caution about the content their business account shares and posts, while five percent have deleted their Facebook page entirely.

When it comes to cybercrime targets, no business is too small for criminals.

A separate Manta and Insureon survey on cybersecurity found that more than half of small businesses owners believe that hackers target large organizations more frequently. This could explain while only 16 percent of respondents believe they are at risk of experiencing a cyberbreach. However, in reality, hackers have breached over half of all small businesses in America.

Following a data breach, small businesses typically face a loss of customer trust in addition to costly business interruptions. Businesses unprepared for the impact of a data breach may need to temporarily close their doors until data security is restored. They also may experience a decline in sales because of the resulting negative publicity.

Facebook, for example, has seen a 66 percent decrease in consumer trust following the Cambridge Analytica scandal, and users are calling for greater transparency with how the company handles their personal data. The tech giant could have an even bigger trust issue on its hands following its massive data breach in September.

With this in mind, small businesses can learn plenty from Facebook about the importance of creating a more robust cybersecurity strategy.

When building a cybersecurity plan, small businesses should consider cyber liability insurance.

Small businesses can protect their customers' information by taking steps like:

  • Encrypting sensitive consumer information, such as credit card numbers
  • Limiting customer interactions over social media platforms like Facebook
  • Educating employees on steps they can take to protect customer data
  • Updating business computers with antivirus software and firewalls
  • Implementing multifactor authentication across all business accounts
  • Limiting where they share customer data

If cyberthieves still manage to hack into a business's network and steal data, cyber liability insurance can help cover some necessary expenses to help the business financially recover, such as:

  • Legal and forensic services to determine if and how a breach occurred
  • Notifying impacted customers of the breach
  • Customer credit and fraud monitoring services
  • Public relations and crisis management fees to help rebuild the company's reputation

The average cost of a small business data breach is around $86,500. While cyber liability insurance won't prevent a breach from occurring in the first place, it can help small businesses prevent financial disaster and get back on their feet after an incident.

Data privacy should be a priority for everyone, especially for companies storing sensitive information about their customers either on their own computer system or on platforms like Facebook. By tackling data privacy head on and incorporating cyber liability insurance as part of their security strategy, small businesses can hopefully avoid or at least minimize the potential fallout from a breach.

Ted Devine
Ted Devine
See Ted Devine's Profile
Ted Devine is CEO of Chicago-based Insureon, an online insurance agency for small and micro businesses. Previously, Devine held senior leadership positions at Aon Corp. and spent 12 years as a director of McKinsey & Co.
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