Unfortunately, it also only takes a few minutes for your personal information to be accessed and compromised by a cyber security data breach. When I first graduated college I worked for a bank and almost everyday somebody would come in because they had fraudulent charges on their bank account. A few years ago I discovered that my own information had been compromised when I checked my online bank statement and discovered a series of charges in North Carolina. The problem was I was in Jackson and hadn’t been to North Carolina in years. I had to sign a bank affidavit to verify the specific charges, cancel my cards, close my bank account and open a new one to ensure that my account information was safe. Companies, both large and small, are also at risk of having their information compromised. Every year thousands of customers have their information compromised because a company that they shop at or do business with has a cyber security breach.
One of the largest security breaches in U.S. history was when retail giant Target’s system was hacked during the holiday season of 2013. According to CNN, Target will pay back victims $10 million in damages. That same website estimates that 40 million customer had their financial data exposed and as many as 70 million customers had other private information exposed during the breach.
Another nationwide giant Home Depot also suffered a security breach in 2014. According to USA Today, Home Depot announced that the data breach had compromised the information of 56 million credit and debit cards and 53 million email addresses. The website also reported that the data breach had cost $62 million and that the breach went undetected for several months.
Security breaches are not just affecting large nationwide chains, but they are affecting small businesses on a daily basis. In 2014 two local pizza businesses in North Mississippi suffered security breaches and the information for their customers was compromised. The restaurants used Signatures Systems Inc., which is a credit card authorization and point of sale technology company. According to the Memphis Business Journal, Signatures Systems issued the following statement about the incident “We have determined that an unauthorized person gained access to a user name and password that Signature Systems used to remotely access POS systems. The unauthorized person used that access to install malware designed to capture payment card data from cards that were swiped through terminals in certain restaurants. The malware was capable of capturing the cardholder’s name, card number, expiration date and verification code from the magnetic stripe of the card.”
According to Nextech Blog, studies by Verizon in 2012 and 2013 found that the majority of data breaches occurred to companies that had 100 employees or fewer. The study also showed that the average cost for a successful cyberattack during that time period for a small business cost $8,700. That cost has increased since those studies were done a few years ago and will likely continue to increase overtime. This amount may not be enough to close the doors on most businesses, but the long term effects of loss of revenue that could potentially occur due to a damaged reputation could be extremely harmful to a small business. Small businesses could lose a lot of customers if the customers no longer feel comfortable with their information being secure. Some business owners still feel comfortable assuming the risk and liability of a data breach, while others are trying to transfer some or most of the risk through the use of an insurance policy. Some states are beginning to issue notification laws and may even require credit monitoring and other requirements if their company has suffered a data breach.
Insurance companies that offer coverage for Cyber Liability offer widely varying forms of coverage. The following are some coverage options to consider for your Cyber Liability Policy:
Notification & Crisis Management, Regulatory Defense & Penalties, Information Security & Privacy Liability, Website/Media Liability, Business Interruption, Extra Expense, Data Assets, Cyber Extortion, Computer Fraud and Funds Transfer.
Cyber Liability Coverage may not prevent a breach in data, but it can help protect your business and your customers.
» Peyton Smith is an agent for SouthGroup Insurance Services.