Black Friday, Cyber Monday and cyber liability

By Higginbotham on December 03 , 2014


E-commerce is a cornerstone of annual revenue for many retailers, especially during the holidays. And, we’re not just talking about Black Friday and Cyber Monday. In fact, The National Retail Federation (NRF) estimated that last weekend’s sales were actually down 11 percent from last year.

The conclusion? “It’s going to be a dogfight for the entire season every day, every minute. Holiday sales are now a marathon, not a sprint,” said Matthew Shay, NRF president and chief executive, in a recent article for the New York Times.

Just as e-commerce has grown in importance and transformed the face of retail, so too has cyber crime. Data breaches are up 20.5 percent this year over 2013 according to the Identity Theft Resource Center. As larger companies up their game in cyber security, small companies become easy pickings. In fact, the Ponemon Institute's "2014 Cost of Data Breach Study” found that a company with less than 10,000 records is more likely to be hacked than a firm with more than 100,000 records, in part because smaller firms are less likely to have robust defenses against hackers.

Are you at risk for these cyber exposures?

  • Business interruption and loss of business income due to website or system interruption
  • Liability for failing to protect confidential information
  • Costs of complying with the law and notifying breach victims
  • Forensic and public relations costs

For retailers with an online channel and for all businesses that store personal information belonging to employees, patients, donors or customers, cyber liability coverage isn’t just a safeguard; it’s a necessity.

Here are some guidelines to keep in mind as you formulate your defense against cyber crime:

  • Don’t assume that you’re covered by your standard business insurance policy. Most business insurance policies and errors and omissions policies don’t cover the fallout associated with a data breach.
  • Prepare for internal and external threats. Disgruntled workers and lax internal procedures are often the source of security breaches. Enforce strict company policies and procedures for handling confidential information.
  • Get cyber insurance that’s tailored for your unique exposures. What technologies do you rely on? What types of data do you store? What are your system access and integration points? These questions will help define the type of coverage you need.
  • Find an expert. Your Higginbotham insurance partner can help you define your risk management strategy. Be prepared to give this process the attention it deserves.

While cyber crime is a huge threat to retailers during the holidays, it’s also an ongoing threat to all types of small businesses all year long. Talk to our risk management experts about how to protect your business.


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Tags: Business Insurance


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