Cyber Liability – Are You Covered?

October 3, 2017

By Jason VanGotten, Colorado Restaurant Insurance —

 

Originally, I began writing about this back in 2015 when cyber-attacks were starting to become relevant in our world. Now, the world of cyber criminals have fully evolved and results show that 2017 recorded the highest number of cyber-attacks globally. This is evident in the vast amount of attention recently given to cyber-attacks with companies such as Equifax, Sonic, Chipotle, Time Warner, Anthem, Target, and more. Cyber liability is something all businesses need to consider, even the hospitality industry. Considering that your business likely has a website, uses social media, uses internet connected computers, has a point-of-sale system and most importantly an electronic payment processing system, you probably conduct more cyber business than you may be aware of. Yet, when was the last time you discussed this risk with your insurance agent? Cyber criminals have exploited all sizes of business and cyber liability can no longer be ignored.

 

The discussion around cyber exposure/risk is extensive and complicated. Exposures include computer fraud, hacking, ransomware, phishing, malware, adware, lost equipment and even simple mistakes. Some of the most common occurrences within a small business begin with:

 

  1. Online hacking and data theft of confidential information such as credit card numbers, personal identifiable information, social security numbers, date of birth, etc.;
  2. Accidental loss or sharing of proprietary information; and
  3. The inside threat, known as phishing, of employees stealing sensitive account information from employers and customers.

 

There are a lot of misconceptions regarding both your exposure and how to protect yourself. Unfortunately, many times the realization of insurance shortfall comes after something drastic happens. The common mistakes an operator can make regarding cyber liability are:

 

  1. Assuming, because you are a small business you are not a target;
  2. Assuming your general liability policy affords the proper coverage needed to protect against a cyber claim;
  3. Assuming cyber liability coverage is too expensive; and
  4. Assuming your point-of-sale, merchant service, and server (IT) companies afford you coverage/protection when a cyber-attack occurs.

 

The most common cyber liability a restaurant faces is a data breach. A data breach happens when an unauthorized individual gains access to electronic information (typically names, credit or debit card numbers and/or bank account numbers). This information is highly desirable to a criminal looking to sell their stolen information on the “Black Market” or to utilize the information themselves. The costs associated with resolving a potential data breach are significant. According to a 2016 Fortune report, a data breach for the Hospitality Industry can cost approximately $139 per record stolen. Consider that the average time to identify a breach is 201 days and that the average time to contain a breach is 70 days. Therefore, depending on the number of credit card transactions you process monthly and some of the potential efforts needed after a data breach (see below) the costs of a cyber-attack adds up quickly.

 

  1. Costs of notifying affected individuals;
  2. Costs of notifying regulatory authorities;
  3. Regulatory fines at home and abroad;
  4. Forensic costs to discover the cause;
  5. Business income loss;
  6. Cyber extortion payments (Ransomware);
  7. Lost customers and damaged reputation;
  8. Implementation of credit monitoring services;
  9. IT expert services; and
  10. Defense and settlement costs.

 

The lesson in recent stories making the cyber headlines is that security goes far beyond simply having the right technology. It also requires training your employees with the proper mindset, attention to detail, as well as a clear awareness of these possibilities. Remember, you cannot possibly think of everything that might happen. My advice to all restaurant owners is to strongly consider reducing some of your risk through securing your IT systems (update software regularly, train employees, monitor social networks, encrypt data, change passwords and confirm your vendor’s security). Even performing all these recommendations will not ensure full protection from a cyber-attack. Therefore, we also suggest transferring some of the risk by purchasing a cyber liability insurance policy to protect your restaurant from losses you would be forced to pay for if you are to ever experience a cyber-attack and your client data is successfully stolen.

 

For more information regarding cyber liability insurance for restaurants please contact Jason VanGotten at jvangotten@corestaurant.org

Spotlight on Safety – Protecting Your Business

February 1, 2017

By The Denver Police Department

  • Ensure the business is well-lit and eliminate places for criminals to hide near the building.
  • Lock all doors and windows when closed or away from the business. Install double cylinder deadbolts where possible, securing all points of entry, such as gates, fences, roof access, etc.
  • Remove cash from registers and leave the register open at the close of business and secure valuables or merchandise out of sight when closed.
  • Post signs outside your business letting criminals know there isn’t money in the register or safe, and keep track of inventory by marking items or logging serial numbers.
  • Start or join a Business Watch Program to build relationships with neighboring business owners.
  • Install an alarm or surveillance system.

Contact your local Denver Police District for a business safety assessment.

Safety Corner – Prevent restaurant theft from happening to you!

February 1, 2017

By Sean Pechan, Colorado Restaurant Insurance

We have been hearing from our clients about a recent uptick in burglaries within the Denver Metro area. Crimes against restaurants are typically crimes of opportunity, and these recent reports have definitely fallen into that category. Most often these burglaries happen after the restaurant has closed, however, in several instances a burglary has occurred during business hours. In almost every instance, the burglar has entered a back door (sometimes even during dinner rush). The perpetrator often takes cash and/or inventory food and liquor, then slips back out the back door of the restaurant.

We believe that implementation of some simple risk management steps can reduce your exposure to these types of loss. Besides costing your establishment potentially thousands of dollars, the loss of ‘peace of mind’ for you, your employees, and at times your customers is immeasurable.

Here are some examples of how we can work with you to help improve security and reduce your risk. Consider updating your security procedures and training all staff – including cleaning staff – so they understand their importance and follow the procedures. Develop practical policies in managing the risk of the backdoor of your restaurant (when it is acceptable to be open and how it should be respected). Limit the access of nonessential vendors and staff to back-of-house operations, especially the office where checks and cash on hand is managed. Keep inventory locked even during normal operations. Mark expensive equipment with ID numbers and keep detailed records of all inventory, and store the information off-premises for ease in reporting after the fact.

Contact your local police department for a business safety assessment. The CRI can also provide additional risk management techniques to reduce exposure to loss. We are available to offer guidance to protect your assets. Call us anytime at (303) 830-2972.