As small businesses begin to utilize new technologies, such as cloud computing, the risk of cyberattacks and data breaches is increasing.
For this reason, purchasing liability insurance that protects against these risks should be a priority for small businesses using these technologies, as a single lawsuit stemming from compromised client information could put them out of business.
According to a recent survey conducted by the Ponemon Institute, more than half of U.S. small businesses have experienced at least one data breach, and many have reported multiple incidents.
The primary causes of attacks included employee or contractor mistakes, lost or stolen laptops, smart phones and storage media as well as procedural mistakes.
"Smaller companies are targeted by data thieves, but they often don't know how to respond when sensitive information they keep on customers and employees is lost or stolen," said Eric Cernak, vice president for Hartford Steam Boiler. "Failing to act in a timely and effective way can harm the reputation of businesses and even risk legal penalties in many states."
Tips for preventing future data breaches
In addition to purchasing liability insurance, small businesses should take the necessary steps to prevent data breaches from occurring in the first place.
1. Secure sensitive customer information – Being a victim of a data breach and losing company information is bad enough, but if customer information is compromised, a small business could be sued for damages. With that said, these companies need to be sure that all of this sensitive data is stored in a secure place.
2. Restrict employee access to sensitive information – Hackers can create headaches for small businesses by accessing company servers, but insiders can also cause data breaches. To help avoid these incidents, small businesses should restrict employee access to sensitive information, so this data doesn't get in the hands of the wrong people.
3. Use firewalls – While they are not guaranteed to keep out hackers, using firewalls can be beneficial. This controls incoming and outgoing network traffic by examining the data packets and determining whether or not they should be allowed through. There are hackers who are able to get through firewalls, but having them up certainly doesn't hurt.
4. Have an adequate privacy and security policy – One of the simplest things a small business can do is ensure they have an adequate privacy and security policy. This shows employees and customers that there are rules in place to prevent data breaches.