Issue link: https://www.e-digitaleditions.com/i/173118
PROTECT / YOURSELF | by Don Leggett | What's Your Data Liability? Information black hole continues to widen. Social media is the fastest growing form of effective advertising since the invention of TV. As companies invest dollars in technology to capture additional market share they increase their exposure to cyber liability. The ever-improving economic recovery is leading to a record-breaking amount of lawsuits. The number of cyber lawsuits has increased every year and the growth rate in lawsuits is only exceeded by employers' protection liability, which the employer needs to understand with new legislation taking effect January 1, 2014. Cyber liability, unlike employment practices liability insurance (EPLI), is triggered by a consumer outside the company who has his identity stolen or, worse, his bank account emptied because of a leak of data from the company's computer. Like moths to a flame, lawyers have begun to advertise about leaked personal information and the dollars that can be collected from a company that has had such an information leak occur. The lawsuits typically allege that sophisticated marketing operations collect information on customers that is used in the selling cycle and that, once captured, the company has a duty to protect the privacy of the data. This is where the legal problems begin. Unlike some modern science fiction novel where a vengeful hacker uses powerful Internet spyware to break in and steal data, in the real world 33 percent of data breeches is caused by such mundane things as stolen laptops and missing thumb drives. Accidental employee transmission of data is the second most often cause; a revengeful employee is third and a serious hacker comes in a distant fourth most-often cause. In companies having fewer than 250 employees, hackers are less than three percent of the problem, and yet companies spend thousands of dollars protecting their computers from a hacker attack. Virus protection is responsible management, hacker intrusion borders on paranoia. Damage caused by the accidental or malicious release of data becomes a liability to the corporation. 24 The Cost of Data Leaks The importance of protecting business information has a monetary advantage for at least two important reasons. First, the marketing arm of a company spent money to acquire the data and does not want to share it with its competitor. Second, any damage caused by the release of data becomes a liability to the corporation. Personal, identifiable information that can be part of an unauthorized release can include such data as dates of birth and social security numbers. This information is commonly collected in the course of doing business, such as when a company offers group health insurance or voluntary employee benefits to improve the quality of life for its employees. Even the burdensome task of filling out mandatory child support payments when the information is held electronically exposes the company to the possibility of an unauthorized leak of personal information. Once the information has been breached, the company has to notify each person. The average cost to the company is $205 per name or number that was compromised. After notification, the damage that has been done needs to be repaired, and the victims might need to be compensated. That's where the black hole begins to deepen. The cost to repair the damage, or to make whole the party who was affected, can run into millions of dollars depending on the number of persons affected by the information leak. To keep from falling into this information black hole your company should explore the cost of coverage with your insurance broker. The price will depend on your exposure to a significant insurance claim. The best way to start protecting your information is to make sure that any computer, particularly laptops, or any device that stores data is password protected and the password is sophisticated and updated at least twice per year. The cost of these two important safeguards is free. Don Leggett is managing partner for Insurance Office of America and one of the architects for the next generation of health care reform coming to America. Leggett will present Health Care Survival, an overview seminar of survival strategies for businesses at StormEXPO, Storm & Security Protection magazine's inaugural educational seminar and product exhibition program September 26 and 27 at the B Ocean Hotel, Fr. Lauderdale, FL. See page 14 for details. STORM & SECURITY PROTECTION / PEOPLE IN THE KNOW 2013