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Cyber security incidents (breaches and attacks) threaten businesses of all sizes in today’s digital landscape. While we often hear about attacks on well-known corporations, like the Equifax breach of 2019, startups and small businesses are just as vulnerable.
Accounting and finance professionals might want to consider the following sobering statistics:
- According to a 2023 Statista review, financial institutions are the most targeted industry sector for cyber espionage.
- In a Netwrix Research Lab 2023 report, 68% of all organizations surveyed (large and small) said they experienced a cyberattack in the past year. 43% of those data breaches involved small businesses.
- A 2022 global AAG report states data breaches during that year cost businesses an average of $4.35 million. According to the same report, 67% of small and mid-size companies felt that they did not have the in-house skills to deal with data breaches.
All it takes is one employee to click on a phishing scam disguised as an innocent-looking email or one to lose a laptop containing sensitive data.
How can you safeguard your business from the devastating effects of a cyber incident? Comprehensive cyber insurance is the key. Let’s look into the various types of cyber liability insurance.
First-party coverage
First-party insurance covers direct attacks on the business. It protects any institution handling sensitive data, like social security numbers, phone numbers, credit card information and financial transactions.
When breached or attacked, financial institutions and finance and accounting professionals incur expenses related to notifying clients, establishing credit monitoring for patrons, and paying cyber extortion demands. Insurance helps businesses and professionals recover from those expenses and mitigate the effects of loss.
Third-party coverage
Many CPAs serve as advisors to clients. Should the technology, software or vendor they recommend to clients become compromised at any future point, the advisor could be on the hook. Affected clients looking to recoup their losses could sue the advisor. For example, a client could sue their tax advisor for recommending tax software with inferior security that led to a data breach.
Third-party insurance shields advisors even when the cyber attack or breach didn’t come directly from or through them but rather from a product or service they recommended. It helps with expenses related to legal fees, such as court costs, settlements and judgments.
Costs
The average expense of a data breach is about $4 million. The median price of insurance is typically less than $80 a month. Naturally, costs vary depending on risks.
Insurance pricing includes factors such as:
- Services offered to clients
- Number of employees
- Revenue
- Location
- Equipment and property
Who needs cyber liability insurance?
According to research, financial institutions are the most commonly attacked businesses. If you own a business that handles sensitive data, like credit card information, you’ll want to check into insurance plans to cover your worst-case scenarios. Small- to mid-sized companies are especially at risk of never recovering from an attack.
Professionals in the following careers are encouraged to look at cyber liability insurance options to help cover the increasing expenses of an all-too-common breach or attack.
- CPAs and accountants
- Stockbrokers
- Financial advisors/planners
- Tax preparers
Insurance: part of wealth management
Wealth management and insurance go hand-in-hand. One way to make your money works smarter for you (or your clients’ money works smarter for them) is to properly insure it against loss. Naturally, an insurance company covers your expenses if you suffer a worst-case scenario like a cyber attack. They also help you better safeguard your data against breaches and attacks in the first place by ensuring your business establishes and adheres to the newest best practices.
Insurance help for Ohio financial professionals
The Ohio Society of CPAs (OSCPA) is committed to advocating for the accounting professionals we serve and advancing the state of business in Ohio. Along those lines, we seek to provide exclusive member discounts on business and professional services to help them succeed. With an accounting membership, Ohio financial and accounting professionals enjoy countless opportunities and advantages.
One such exclusive advantage is our insurance partnership helping OSCPA members safeguard themselves against risk and loss–the OSCPA Professional Liability Risk Purchasing Group. By pooling the collective insurance needs of our group, OSCPA members can take advantage of exclusive perks on insurance. Those perks include preferred pricing, more coverage offerings, multi-year policies, underwriting flexibility and various payment options.
Educational help for Ohio financial professionals
Knowledge is power. Changing technology has always had a major impact on accounting functions. As such, accountants are at the forefront of our ever-evolving technological landscape.
You can’t be ready to help yourself or your clients until you deeply understand technology's impact on our industry. Your membership to OSCPA gives you access to a wealth of information affecting your career. We offer educational conferences and continuing education courses to help accountants keep up with changes in accounting, like cyber threats.