How Can You Protect Yourself From Liability for Data Breaches?

Cybersecurity is becoming a more important issue for businesses with each passing day. We know that data breaches are plaguing more companies than ever before, for instance, with 2019 findings indicating that roughly six out of every 10 businesses have been hit in the last few years. And unfortunately, the more advanced our digital operations become, the more threats companies seem to face. Case in point, cloud computing data security is fast becoming its own area of focus; more businesses are transitioning to regular use of cloud computing, and end up with new security threats to deal with as part of that effort.

The primary concern for modern businesses where all of these points are concerned is to handle the actual threats, whether preemptively or after the fact. For business owners and managers though, another significant aspect of all of this is liability. A data breach can result in significant losses for businesses or even employees as individuals, and business owners need to protect themselves from being liable for those losses.

The following are a few of the ways in which business owners can look to address this concern.

Take Preemptive Measures

We alluded to the idea of preemptively addressing data security issues above, and this is one of the most important ideas to keep in mind with regard to liability as well. After all, the best way to avoid being directly responsible for an issue is to make sure that the issue itself doesn’t come up!

This can be done in a variety of ways. First and foremost, you need to make sure you have the right cybersecurity tools in place, covering your bases from employee devices, to edge protection, and endpoint security. Different businesses will prioritize specific tools based on needs and functions. But at a minimum, assets like secure email providers, antivirus software, network security systems, and endpoint protection software are essential.

Once you have cybersecurity tools and software in place, you also need to make an effort to stay on top of it all. This means running scans, monitoring performance, reporting even minor issues, and when necessary, updating software. Many are under the impression that once in place, cybersecurity systems simply do their job uninterrupted. That’s true in a way, but maintenance and attention will keep these tools operating at their best, and will help you to avoid unnecessary security lapses.

Finally, there is also a policy element to all of this. It is essentially a twofold effort: first to establish policies requiring that security practices be adhered to, and second, to train and educate employees to take advantage of security tools and avoid human error.

Ultimately, the implementation of cybersecurity protection and diligent adherence to protective measures like these can significantly decrease the likelihood of major data breaches ever occurring — thus pre-empting you from the need to protect yourself from a liability standpoint.

Form an LLC

Forming an LLC is not a preventative or preemptive measure in the sense that it won’t help your business to head off cybersecurity threats. However, it can help you as a business owner to ensure that you are not liable for some of the worst potential consequences of a significant data breach.

As stated in an article covering the advantages of forming an LLC, this sort of arrangement is viewed as a “crucial component to the safety and security of your personal assets.” The fundamental idea of an LLC is that it keeps your personal assets separate from those of your business — such that you are personally protected from any debts, claims, or lawsuits associated with the business. It’s not a pleasant problem to contemplate, but it is one that will help you to appreciate the idea of liability protection in the event of a data breach with significant consequences.

Explore Cyber Liability Insurance

Setting up an LLC is an excellent way to protect yourself personally from worst case scenarios. But to protect the assets of the business itself as well, it can also be a good idea to look into an insurance policy designed specifically for this purpose.

The idea of cyber liability insurance has actually come about in response to the greater cybersecurity threats businesses are facing these days. Different policies can vary in their offerings, but by and large they cover liability for third-party issues — such as lawsuits brought on by customers over the loss of personal data due to breaches. Additionally, some cyber liability insurance policies will help with lost income due to breaches, the cost of recovering data, and in some cases even the fees needed to cooperate with a ransomware attack (in which an attacker holds data hostage until he or she is paid). A robust insurance policy off this nature can effectively set your business up to handle impactful cybersecurity issues.

Data Backup & Segmentation

This is another preemptive concept, but it’s a vital one for any business seeking protection against data breaches. Backing up data regularly, and segmenting that data — such that it isn’t all stored in a single place — can keep your business from experiencing significant losses from any given attack. It doesn’t mean that attacks can’t occur, so much as that if they do the damage may be less severe. This is good for the business, naturally, but it also means you’re less likely to be liable for a major issue.

Hopefully with these tips and ideas in mind, you feel better prepared to address digital security and protect yourself from any associated liability. These are complex issues, and only seem to become more so as our technology improves. But proper strategy, safeguards, and preparation can save you from the worst of the potential consequences.

Post solely for the use of By Monica Flincher