Technology is now an essential part of running a business, from storing customer data to managing financial transactions and online operations. But as companies embrace digital tools, they also open themselves up to new risks. Unlike physical assets, which are typically covered under general liability insurance, digital assets—like data, software, and intellectual property—are often left unprotected without specialized coverage.
What Are Technology Risks?
Technology risks refer to exposures that come from relying on digital tools, networks, and online platforms. These risks continue to evolve, making it essential for businesses to stay ahead of potential threats and ensure their assets are properly insured.
Common Technology Risks Businesses Face
- Cyber Liability & Data Breaches – Cyberattacks, phishing scams, and hacking incidents can result in data theft, system outages, and financial fraud. If sensitive customer or employee information is compromised, your business could face lawsuits, fines, and reputational damage.
- Data Breach Notification Laws – Many states require businesses to notify customers if their personal data is compromised. Failing to do so can lead to penalties and legal action. If your business collects or stores Social Security numbers, financial data, or medical records, you may have legal obligations to protect this information.
- Cyber Property Loss – Businesses own intangible assets, including websites, cloud storage, and databases. If a cyberattack or IT failure causes damage, companies could lose valuable data, customer records, and intellectual property. Most general liability policies don’t cover these losses, making specialized coverage essential.
- Media & Intellectual Property Liability – Content published online—including blogs, social media posts, and marketing materials—is subject to copyright laws and defamation risks. A business could be sued for libel, trademark infringement, or misinformation if its content harms another individual or company.
The Growing Threat of Technology Risks
The use of cloud computing, remote work, and e-commerce has significantly increased businesses’ exposure to digital threats. Here are some eye-opening statistics:
- Ransomware attacks increased by 105% in the last year, affecting thousands of businesses.
- The average cost of a data breach in the U.S. is now $4.45 million per incident.
- 94% of malware is delivered via email, making employee training a crucial defense.
With cybercriminals targeting businesses of all sizes, no company is immune from these risks. Small businesses are particularly vulnerable because they often lack the cybersecurity resources of larger corporations.
How to Protect Your Business from Technology Risks
To minimize exposure to technology risks, businesses should:
- Invest in Cyber Liability Insurance – This coverage protects against financial losses, legal fees, and reputational damage resulting from cyberattacks, data breaches, and IT failures.
- Implement Strong Cybersecurity Policies – Require multi-factor authentication, data encryption, and regular security updates to safeguard networks.
- Train Employees on Data Security Best Practices – Educate staff on phishing scams, secure password management, and device security to reduce human-error risks.
- Back Up Critical Business Data – Regularly back up digital assets to cloud storage or secure offline locations to prevent permanent loss from cyber incidents.
- Review Contracts & Vendor Agreements – Ensure third-party providers follow proper cybersecurity standards, as breaches can originate from external vendors.
Conclusion
Technology is a powerful tool for business growth, but it comes with unique risks that must be managed. Without proper coverage, businesses risk financial loss, legal trouble, and reputational harm if a data breach, IT failure, or cyberattack occurs.
By investing in cyber liability insurance and implementing strong security practices, businesses can stay protected in the digital age. Contact McHugh Insurance Group today to learn how to safeguard your business against evolving technology risks.