In today’s digital world, protecting sensitive information isn’t just good practice, it’s essential for business survival. Whether you’re a growing company or a small operation, the threat of a data breach or identity theft can have serious financial and reputational consequences.
Cybercriminals aren’t just targeting large corporations anymore. In fact, small and medium-sized businesses are increasingly being hit with data breaches, often due to outdated systems, weak internal processes, or simple human error. And when customer or client information is compromised, the fallout can be devastating, from lawsuits and regulatory fines to the loss of trust and future business.
What’s at Stake?
A single data breach could cost your business hundreds of thousands, even millions of dollars. You could face:
- Investigation and IT recovery costs
- Notification and identity protection services for affected customers
- Civil or criminal penalties for delayed disclosure
- Lawsuits and legal fees
- Long-term reputational damage
According to the Ponemon Institute, the average cost of a data breach is $214 per record, which can quickly add up to over $7 million per incident.
Red Flags Rule Compliance
If your business falls under the Federal Trade Commission’s definition of a financial institution or creditor, you’re required to have a written identity theft prevention program in place under the Red Flags Rule. But even if it’s not required, having a formal plan is a smart way to proactively reduce your exposure.
An effective program should:
- Identify red flag activities that signal possible identity theft
- Define response protocols
- Integrate detection into everyday processes
- Be reviewed and updated regularly
Smart Risk Management
To protect your data, work collaboratively across technical, legal, and compliance teams. Consider transferring risk through cyber liability or technology errors & omissions insurance, which can help cover costs after an incident.
For help building your risk management plan or exploring tech-specific insurance options, contact McHugh Insurance Group today.