Whether your business is a Fortune 500 company or a one-man show, data security must be a top priority. Small and medium-sized enterprises are increasingly becoming victims of data breaches, whether they render themselves careless or through a harmful attack.
Unfortunately, it often takes the loss of hundreds of thousands of client items and the associated costs. associated, to make organizations realize the importance of data security. The potential for losing the financial or personal information of just one customer should be sufficient to re-evaluate data policies and procedures to prevent such incidents. Do not let your business fall victim. Take a proactive approach to data security by properly protecting your data and protecting your exposure.
In the unfortunate event that your organization experiences a data breach, there are a number of costs your business may incur. The cost of investigating and resolving the cause of the security breach can vary widely depending on whether the incident was caused by employee errors or a difficulty in detecting errors in your organization's security measures.
The cost of communicating those whose information was compromised may also vary in cost. State laws dictate how quickly the victims need to be notified and what civil or criminal penalties your company may experience if you do not immediately notify those involved. In addition, your organization may need to provide credit guards for the victims of data breach to prevent identity theft and may experience disputes against you. However, the loss of your customer's trust and the lost business can affect your organization the most.
Considering all the factors, research conducted by the Ponemon Institute estimates the cost of a data breach to be approximately $ 21
Do not let your business fall victim. Take a proactive approach to data security by properly protecting your data and protecting your exposure.
In 2008, the Federal Trade Commission (FTC) created and implemented the Red Flags Rule. The rule applies to certain companies and requires that they have a written prevention program for identity theft. The rule was adopted to address the large number of identity theft incidents that occur in the United States due to data security breaches.
The two types of companies required to comply with the Red Flags rule are financial institutions and creditors. Financial institutions include banks, savings and loan associations, credit unions and other businesses that directly or indirectly have customer transaction accounts. The FTC's definition of creditor includes the following:
- Companies and organizations that regularly provide goods or services first and then collect payment from customers later.
- Companies and organizations that regularly grant loans, arrange loans or extend loans, or make credit decisions.
- Companies and organizations that regularly participate in the decision to extend, renew or continue credit, including the determination of credit terms.
- This broad definition of creditor includes many technology-based companies.
The Red Flags rule requires financial institutions and creditors with covered accounts to have an identity theft prevention program. The FTC defines covered accounts as consumer accounts that are designed to allow multiple payments or transactions and all other accounts that pose a foreseeable risk of identity theft. A satisfactory identity theft prevention program should do the following:
- Identify red flag activity (patterns, methods and specific forms of activity) that indicates possible identity theft.
- Integrate red flag detection into business practices.
- Define the appropriate response to take to prevent and mitigate identity theft if a red flag is detected.
- Regularly reviewed and updated to reflect changes in identity theft risks.
Financial institutions and creditors without applicable covered accounts are not required to have a written identity theft prevention program, but they must regularly evaluate their activities to determine if they have developed or acquired covered accounts.
Analyzing and planning risk management is still the best way to mitigate exposures, whether they are physical or digital. Even if your company is not a company that falls under the FTC's definition of a financial institution or creditor, it's a great way to address a written identity theft prevention program to address the potential threat of data theft that leads to identity theft.
For effective security risk management tasks, the technical, legal, compliance and risk management teams in your organization need to work together effectively. Your organization should be aware of and comply with all data security regulations in every area in which your business does business. Technical operations team members must continually evaluate, monitor and test data security measures and procedures to stay one step ahead. Think seriously about how much risk your company has taken and what risk you can transfer through technology-related insurance, including cyber liability and professional technology liability.
Contact CoverLink Insurance for more information on data security and insurance policies that may help you protect your technical risk.