A data breach can affect a small business in a number of ways: loss of customer trust, liability concerns and potential lawsuits. Many businesses that store customer data are beginning to realize the dangers data breaches pose and are looking into cyberliability insurance as a way to protect themselves in the event a breach occurs.
The debilitating effects of a data breach are devastating and potentially far reaching, so it’s important all small business owners understand how breaches typically occur and what practices can be implemented to thwart them. Valorie O’Shoney, a business insurance expert, shared some tips with BusinessNewsDaily that may help small firm owners get a better grasp of data breaches..
Stay protected with cyberliability insurance
The costs associated with a data breach can set small business owners back several years. When storing important customer information on the internet, small business owners should make sure they purchase cyberliability insurance, which can mitigate several costs that can stem from a data breach. There are several types of policies available that provide helpful amenities, such as responding to an incident with proper notification, credit monitoring and reputation management.
Be aware of direct and indirect costs
Small business owners often operate on a tight budget, and the potential costs from a data breach could put them underwater. According to O’Shoney, small firms could face costs up to $200,000 when having to inform their customers about the breach, because they may have to create a contact database, secure the services of outside experts, determine regulatory requirements and endure postal expenditures.
The above costs are directly associated with a data breach, but there are other indirect expenses that can be incurred when suffering from a cybercrime event. O’Shoney referenced the Ponemon Institute when she highlighted marketing costs customer turnover as indirect costs that may affect a small business after a breach.
How can small business owners prevent a data breach?
Data breaches can be extremely expensive, so it is up to small business owners to make every effort to defend against a potential lapse. According to USA Today, small business owners can protect their firm with security measures in a cost-efficient manner.
“Security spending tends to be resilient in bad economic times, as bad economics typically lead to higher rates of fraud and criminal activities,” Lawrence Pingree, research director at technology research firm Gartner, told the news source. “Most companies continue to enhance security measures against adaptive and more heavily targeted attacks.”
Recent Gartner statistics show global spending on security software is expected to grow nearly $86 billion in 2016.
