While cybersecurity is a team responsibility in organizations of all sizes, certain decision-makers or leaders may be held more liable than other staff when breaches occur. For example, if you’re an officer who signs off on security solutions and protocols, you have a bigger role in protecting your company’s IT systems.
Directors are key decision-makers in various aspects of IT security. As a result, shareholders may hold them responsible for any costly decisions or oversights that impact cyber security management in their organization. Keep reading to learn more about the importance of having director and officers (D&O) liability insurance.
How Cyber Security Attacks Affect Business’ Financial Stability
Many observers say that cyberattacks are today one of the biggest economic and national security challenges faced across the globe. However, cybersecurity hasn’t always been a central focus of risk management in many small businesses. COVID-19 changed everything, with many organizations switching to remote working models in 2020. Cybercriminals took advantage of the expanded digital footprints to launch different types of attacks. Thus, organizations that for many years never worried too much over cyber vulnerabilities have recently had to rethink their IT security posture.
Why D&O Bear a Greater Responsibility for Cybersecurity
Cyber breaches can have devastating effects on any organization’s finances. Lawsuits from customers and employees who are victims of identity fraud or privacy violations due to a data breach can also eat into your company’s bottom line. With cyber threats for companies increasing in sophistication and frequency day by day, your role as the director or key officer exposes you to liability claims.
As a director or officer, shareholders expect you to implement proper security measures and protect your company’s IT infrastructure. If cybercriminals successfully launch an attack on your company’s networks or databases, that could be seen as your failure to fulfil your responsibility as a key decision-maker or leader.
As a result, you could be sued for not adequately protecting your organization’s digital assets. Also, your employer expects you to have proper insurance coverage against employee lawsuits occasioned by a breach of personal data. Failure to procure this protection for your company can expose you to liability claims from shareholders.
Protect Yourself with a Proactive Cybersecurity Strategy
Shareholders expect you to have adequate cyber security information as a director or top management officer. This will enable you to implement proper defenses against ransomware, data breach, and other cyber-criminal activities. A proactive cybersecurity risk mitigation strategy includes the following:
- Comprehensive threat assessment and control: Cybercriminals won’t stop targeting organizations’ digital assets any time soon. To adequately protect your company, start by scanning your entire IT infrastructure for vulnerabilities.
- Bolster your organization’s IT security measures: It’s important that you implement adequate security reinforcements based on your comprehensive threat assessments. Too much vulnerability could lead to cyber insurance denials, exposing you to liability claims as a company director or officer.
- Have proper cyber insurance: With cyber insurance coverage, you can protect your company against losses due to data breach claims from customers or employees. Cyber-attacks can also attract hefty regulatory fines.
- Get D&O liability insurance: D&O coverage can protect you if you’re sued by your employer (shareholders) for losses associated with cyber security attacks in your company. This policy is a worthwhile investment for key decision-makers in any organization.
It’s time to think about D&O insurance if you serve as a director or an officer of any organization. There are many reasons to have this coverage. The recent dramatic rise in cyber-attacks makes it important to protect yourself if you’re responsible for key IT security-related decisions. Contact us at Hoffman Brown Company to learn more about protecting yourself with liability insurance.
