What the heck is Cyber Liability?

I had a meeting yesterday with one of my clients and brought up Cyber Liability. She quickly asked "What the heck is Cyber Liability?". I realized that most of my clients had no idea what this coverage was about or how this risk could potentially bankrupt their business.


I wrote up a quick article for our company e-blast a few months ago and included a short description on Cyber Liability. Bottom line is that if you are conducting business by taking credit card information or personal information from a client (address, phone number, email, social security number, etc.), you most likely need cyber liability. And in this day and age, that's nearly every single business that exists.

Some of my clients have asked "what happens if I have a third party handling my credit card transactions?" Simple answer: It doesn't matter. Your company is still initiating the sale, the transaction, the physical aspect of the client or customer giving you their credit card information. If there is a breach of security on behalf of your network or the third parties network, your company will still be liable for credit card monitoring services and notifications after the breach of security. Think about allllllllllll of that data that the third party stores for you. Think about alllllllll of those clients and customers. Now think about setting up credit monitoring and notifications for each individual for the entire year. Yikes!

Credit monitoring and notifications are where most businesses spend the most amount of money in the event of a security breach. Is it expensive to retrieve data and rebuild a network? Absolutely. Is it going to cost more then the credit monitoring and the notification aspect of a breach? Probably not. There was a recent cyber liability breach in San Jose. It cost this particular company $600,000 in credit monitoring and notifications alone. That's some food for thought.

Here's a few basic questions you can ask yourself to see if you should look into Cyber Liability:

1. Do we store personal or confidential information about our clients?
2. Do we transmit personal or confidential information about our clients to another source?
3. Do we sell items online or run an e-commerce website for our business?

The consequence of cyber security breach can cripple your company if you're not aware of the potential devastating financial pitfalls. Like it or not, the Internet with all its risk and rewards is here to stay, and success brings with it responsibility for navigating new terrain safely. Make sure your company or business is covered properly.