I recently read an article in The New York Times about the increase in data privacy and cyber attacks and how companies are not prepared for them. A common misperception is that this is an issue for large corporations; however, over 70% of cyber attacks today take place among small to mid-size business.
This article states that the “average cost of a data breach hit $7.2 million last year and cost companies $214 per compromised data record.” As a franchise owner, think of how many customer records you have, or that pass through your system—be it a POS, CRM, or other client data system—and what costs you would incur trying to notify and indemnify your clients. The industry research firm ANX estimates that 76% of all small businesses go out of business once they suffer a significant data breach.
It is important to defend against data breaches and network security issues and be extra diligent and careful when collecting and storing customer records. A data breach can negatively affect your brand and can cause a loss of business across the system and harm your relations with the public and your clients. Customers may think twice when deciding whether to continue using your services if they worry about their personal information being leaked.
Start by putting strong IT standards in place along with a critical response plan should something happen. Having the right network security protocols in place, including being PCI compliant, is extremely important.
The final and arguably most important line of defense is to have a strong Cyber Liability/Data Privacy insurance policy in place. An excellent cyber liability policy will reimburse you for things such as the cost of loss business, credit monitoring services, notification, legal and even investigative expenses. Frankly, it can be the difference between your business staying open and shutting down in the event of a network security breach, as it gives balance sheet protection to you in a time when you may need it badly.