Follow Kara Linkedin Twitter Facebook
Email Kara Email
Legal Issues
Jun 15, 2016

Cyber Breaches: What’s At Risk For Businesses

Sponsored Content provided by Kara Gansmann - Attorney, Cranfill Sumner & Hartzog LLP

This last article in this cyber security series addresses the risks to businesses that are not armed with a cyber response plan or adequate insurance coverage. A number of business clients have asked what’s really at stake in a cyber breach. In short, the entire business could be at stake.
 
Industry insiders like David Usher and his team at CMIT Solutions understand these risks. According to CMIT’s IT manager, one in three small and mid-sized businesses will fall victim to a cyberattack. And many businesses end in financial ruin after a cyberattack.
 
Those in the commercial insurance business like Morgan Scheibel with Ron Barber Allstate Insurance Company, or Zach Sinclair and Chris Burkauskas at Wells Insurance, have confirmed that interest in cyber insurance for businesses is growing rapidly. According to Scheibel, policies for identity recovery and data compromise are gaining popularity with the increase in cyber liability coverage. In Scheibel’s business, identity recovery covers the theft of identities of individuals involved in a business, while data compromise coverage helps a business notify and assist clients following a breach.
 
While larger companies have made the news for data breaches, Scheibel notes that smaller companies are just as much at risk or more so if they lack the protection that larger companies typically acquire. It is no wonder that Wilmington businesses are turning to these local cyber and insurance professionals before a breach occurs because the stakes are too high post-breach.
 
The hard financial costs of a cyber breach include investigating and repairing damages, notifying individuals and government agencies, and managing public relations. An initial assessment could range from $2,000 to $10,000 for small businesses and up to $25,000 for large companies. Determining a solution and repairing the problem adds to those costs. Sometimes, businesses are choosing to pay a cyber ransom to restore stolen data and systems because the ransom demand is cheaper than the costs of repair.
 
Litigation for data breach and privacy is becoming more and more common. The costs for litigation will quickly rise. Businesses may choose to initiate legal action against those who caused the breach. Or businesses may be forced to defend against lawsuits brought by consumers or government agencies. Civil claims may include negligence in failing to exercise due care in retaining, securing, deleting and protecting data; breach of an implied contract in safeguarding personal data; breach of fiduciary duties; unjust enrichment; and unfair and deceptive trade practices relating to data. Class action suits, a settlement or a judgment for damages to compensate victims of a cyber breach will also affect litigation costs. While litigation costs are better evaluated in dollars, a dollar figure for the time spent litigating cannot be high enough.
 
Finally, a business’s reputation will be affected by a breach. In the last year, even reputable corporations have suffered cyberattacks. A company’s ongoing business and reputation also may be affected due to negative customer perceptions post-breach.
 
It doesn’t matter whether a business is a nonprofit, in health care, in banking or in hospitality. In a world where many transactions require personal data, it only makes sense for businesses to arm themselves against a potential cyberattack to avoid these steep costs.
 
Kara Gansmann, a North Carolina native, is an associate in Cranfill Sumner & Hartzog LLP’s Wilmington office, where she focuses her litigation and appellate practice on various aspects of labor and employment law, business and contractual disputes, medical malpractice, and HOA matters. To contact Kara Gansmann, call (910) 777-6055 or email her at [email protected].
 

Other Posts from Kara Gansmann

Wbj insights revised 0510 121615113531
Ico insights

INSIGHTS

SPONSORS' CONTENT
Bankofamericaderekcohen 122316122315

Bringing Manufacturing Back To The U.S.

Derek Cohen - Bank of America Merrill Lynch
Mike stonestreet 300x300

Stay Off The Naughty List When Planning Holiday Events

Mike Stonestreet - CAMS (Community Association Management Services)
Martyheadshot

Start the New Year Off Right With A Compliance Check

Marty Cayton - TeamLogic IT of Wilmington & Fayetteville

Trending News

Local Airbnb Hosts Earned Nearly $11M In 2017

Cece Nunn - Jan 15, 2018

Business Community Remembers Beth Quinn, Co-founder Of She Rocks

Christina Haley O'Neal - Jan 17, 2018

Investor Buys Leland Industrial Park Property

Cece Nunn - Jan 15, 2018

Piano Bar And Lounge To Fill Aubriana's Downtown Spot

Cece Nunn - Jan 17, 2018

Made Mole Brewing Coming To Oleander Drive This Spring

Jessica Maurer - Jan 17, 2018

In The Current Issue

Keeping An Eye On Affordable Housing

Wilmington-area officials made some strides toward improving the local affordable housing picture in 2017, though the complicated issue is e...


Tourism Initiatives Continue Digital Trend

With the New Year here, many businesses are busy planning and forecasting via a fresh start. For those operating by fiscal year, however, st...


Local Army Corps Team Has Full Plate

When two Category 5 hurricanes decimated the Virgin Islands in late summer, the Wilmington Army Corps of Engineers was tapped to lead the re...

Book On Business

The 2017 WilmingtonBiz: Book on Business is an annual publication showcasing the Wilmington region as a center of business.

Order Your Copy Today!


Galleries

Videos

WilmingtonBiz Expo - Keynote Lunch with John Gizdic, CEO, New Hanover Regional Medical Center
Wilmington's Most Intriguing People of 2017
2017 Health Care Heroes