By Sean Pechan, Colorado Restaurant Insurance Agency
Our world is quickly changing, but insurance purchasing decisions are not. This is evident in the vast amount of attention recently given to cyber attacks with companies such as Sony, Target, Staples, PF Chang's and more. Cyber liability is something all businesses need to consider, even in the hospitality industry. Consider that your business likely has a website, uses social media, has an internet connected computer and point-of sale system, and most importantly an electronic payment processing system. You probably conduct more cyber business than you are aware. Yet when was the last time you discussed this risk with your insurance agent? Cyber liability is exploding and it can no longer be ignored.
The discussion around cyber exposure/risk is extensive and complicated. Exposures include computer fraud, hacking, phishing, malware, lost equipment and even simple mistakes. Some of the most common occurrences within a small business begin with:
• Online hacking and data theft of confidential information such as credit cards, personal information, and social security numbers, etc.
• Accidental loss or sharing of proprietary information
• The inside threat of employees stealing sensitive account information
There are a lot of misconceptions regarding both your exposure and how you can 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:
• Assuming because you are a small business you are not a target
• Assuming your general liability policy affords cyber coverage
• Assuming cyber liability coverage is too expensive
• Assuming your merchant service company affords you coverage/protection
The most common cyber liability a restaurant faces is 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." The costs associated with resolving a potential data breach are significant. According to a 2012 Symantec report a data breach can cost $188 per record stolen. Consider some of the potential efforts needed after a data breach is discovered:
• Notification to affected parties
• Implementation of credit monitoring services
• Legal expenses
• Marketing and pr campaign to restore trust in your brand
The good news is that most of your cyber liability risk can be transferred through Cyber Liability Insurance. There are various Cyber Liability Insurance providers, all with different coverages and coverage limits. Your insurance agent should be able to help with what cyber coverages can be added to your current policies and/or what coverage can be purchased additionally. For more information regarding cyber liability for restaurants please contact Sean Pechan or Kirk Bamesberger at the Colorado Restaurant Insurance Agency at 303-830-2972.