Reality Check: Cyber Liability for PEOs
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You can’t escape it. Cyber-attacks are everywhere from Sony Pictures to Target to the 50-employee company in suburban Chicago. So what does this have to do with PEOs? In reality, no company is safe from the threat of cyber-attacks. Actually, at a small business hearing in Washington earlier this year, it was cited that 71 percent of cyber-attacks occur at businesses with fewer than 100 employees, and many times employers don’t know it happened. PEOs are extremely susceptible due to the amount of data stored from client companies.
There are different risks for cyber-attacks—some companies are actually targeted, some have dishonest or disgruntled employees and others are subject to malware (which can take the form of hostile or intrusive software). Cyber criminals are often after intellectual property, collecting ransom or attaining money through a wiring scheme.
Many companies, including PEOs, have employees working remote. If you have employees working from a remote location (e.g. home, hotel, airport, etc.) and they’re logging onto your server without a secure connection, this places your entire system at risk. Additionally, as more and more employees have company information on their laptops and mobile devices, there is an increased threat in the event a laptop or mobile device is lost or stolen. When someone has access to one of these devices it makes it easier to gain access to a company’s data and records. Cyber criminals recently started using social media sites as an access point for gaining entry to a company’s information base through unprotected firewalls.
How to Minimize This Risk
Cyber liability policies have been available in the insurance marketplace for over 15 years, but many PEOs still aren’t aware of this coverage or their exposures. Here are a few options available:
- Network Security Liability –third party coverage that can help cover costs related to theft of data to third parties
- Extortion Liability – coverage for losses stemming from an extortion threat and costs associated with dealing with these threats
- Multimedia/Media Liability – coverage for third parties who experience damage to their website
- Data Breach/Crisis Management – coverage for the cost to manage the public relations problems associated with a data breach; this coverage can also include the court cost, regulatory fines, and managing and investigating the crisis
Check with your insurance brokerage on the ones most applicable to your business. For more information on Cyber & Privacy Liability, check out our two-part webinar series.
- Cyber & Privacy Liability Webinar: Part 1 Webinar Replay
- Cyber & Privacy Liability Webinar: Part 2 Webinar Replay
- Staffing Companies and Cyber Exposures
- FYI: Cyber Claims Excluded from General Liability Coverage
- Private Companies Must Wake Up On Cyber Liability Insurance
- Cyber Attacks: A Growing Business Interruption Threat
- Two Myths and Ten Cyber Security Tips
- 5 Questions Risk Managers Should Ask About Cyber Risk
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