What Small Businesses Need to Know to Protect Themselves from Data Breaches
According to recent research, almost 50 percent of small businesses in the United States have experienced one or more data breaches. Slightly more than 30 percent of businesses told affected individuals that their personal information had been compromised. Data thieves often target smaller businesses. This is because these companies often do not know how to respond when client information is stolen. By not acting promptly, these companies can harm their own reputations and risk legal penalties in some cases.
A survey of small businesses in the country found that more than 50 percent of respondents had experienced at least one electronic data breach. A slightly smaller percentage experienced multiple data breaches. Although 46 states require companies to notify clients when information is compromised, slightly more than 30 percent actually notified the affected individuals. The main causes of these breaches were contractor or employee errors and procedural mistakes. In addition to this, stolen or lost smart phones, tablets, laptops and storage media were also to blame.
When data is outsourced, sensitive details are more likely to be compromised. Seventy percent of respondents agreed with this statement, but 62 percent of the surveyed companies did not have contracts that required the costs of data breaches to be covered by responsible third parties. About 70 percent of small business owners responded that they would buy insurance to pay for the costs of breaches if necessary. The study showed that more than 80 percent of these companies shared employee and customer records with third parties. Some examples include companies specializing in benefits, payroll, billing and information technology. Each company was asked which type of information would hurt business the most if it was leaked, and 70 percent said that stolen personally identifiable information of clients would be the most detrimental type of data breach. The companies felt that the personal information of customers would be even more harmful to lose in a breach than their own sensitive data.
Data breaches are serious issues, but the statistics show that most companies do not take the threat seriously enough. With cyber-crimes on the rise, it is important for all small businesses to take action. Insurance can be purchased to offset the costs of data breaches. Although preventative steps should be taken wherever possible, insurance is a smart idea. Being prepared is just as important as taking steps to prevent breaches in the first place.
To learn more about these options, contact G.R. Reid Insurance Services.