Category: IT & Telecommunications

According to research, the number of data breaches is increasing year over year. Worse yet, for businesses, data loss may not be the most considerable cost associated with an IT incident — it could result in a lawsuit from customers, investors, employees, or whoever’s data was exposed in the breach. Thus, many businesses wonder how they can reduce their liability.

Challenges in IT liability

Unfortunately, understanding liability when it comes to matters of IT, such as data breaches, is not cut and dry. Of course, the wrongdoer is the primary culprit for the incident, but the organization responsible for protecting the data may also be held liable. In many instances, the actions (or lack thereof) of an organization and its employees contribute to the severity of a breach, and as such, they are held at least partially liable.

Recent technological developments have made IT liability even more complex. While the rise in remote and hybrid work structures has introduced more access points and vulnerabilities to networks, artificial intelligence technology has simultaneously allowed cyber attackers to become more sophisticated in their attacks. This means that businesses must be particularly vigilant to ensure they are not held legally and financially accountable for the consequences of any cyber attacks.

In many cases, negligence is the key determinant of the extent to which a business will be held liable for a data breach. Rarely does a business act maliciously or intentionally to cause a data breach, with the notable exception of companies that sell customer data. More often than not, a data breach results from a business failing to fulfill its responsibility to protect its customers and their data.

What can businesses do to reduce their cybersecurity liability?

At a basic level, businesses can be expected to implement core cybersecurity best practices. For example, access control, malware prevention software, and data encryption are standard measures every business should be expected to take as a bare minimum. If a business has shown complete and total disregard for the safety of its customers’ data by failing to implement even the most basic of safeguards, it will almost certainly be found liable for the consequences of the data breach.

Businesses that work with third-party contractors must take particular care when vetting potential partners, as the mistakes of these contractors could negatively affect the business that contracted them. Failing to do one’s due diligence when hiring a contractor is a form of negligence in itself, meaning that if a third party does not implement the proper cybersecurity measures and causes a data breach, the service provider could be held responsible for the consequences.

There is one tool that businesses can use to protect themselves against potential liability from data security breaches: their contracts. Contracts should include clear provisions relating to cybersecurity because this ensures that both the responsibilities of the business and the rights of the customer are defined. Examples of data security provisions that should be outlined in service contracts include what standards of encryption will be used when storing data and how long data will be stored — including after the contract is terminated.

Contracts can also include waivers that free businesses of liability for data security breaches in certain circumstances. For example, a business can include a clause in a contract that defers liability to third-party contractors in the event of a security breach caused by a third party’s actions or negligence. Some contracts may even include clauses that release the business from any and all liability relating to data breaches.

Finally, businesses must ensure that they stay up-to-date with any applicable laws and regulations regarding data security. With new technologies emerging like artificial intelligence — not to mention the fact that several new lawmakers are entering into office — these regulations are constantly changing. However, failure to maintain compliance with regulations could cause a business to face not only fines and penalties from regulators but also liability in lawsuits for their failure to adhere to regulations.

A data breach can be a costly situation for a business, but there are protections that a business can take to minimize its liability. By taking steps like implementing basic cybersecurity measures, ensuring that contracts are carefully written to minimize liability, and staying in compliance with applicable regulations and laws, businesses can mitigate their financial and legal risk in the case of a cyber attack.

 

The post IT Liability Concerns appeared first on Cybersecurity Insiders.

According to research, the number of data breaches is increasing year over year. Worse yet, for businesses, data loss may not be the most considerable cost associated with an IT incident — it could result in a lawsuit from customers, investors, employees, or whatever party’s data was exposed in the breach. Thus, many businesses wonder how they can reduce their liability.

Challenges in IT liability

Unfortunately, understanding liability when it comes to matters of IT, such as data breaches, is not cut and dry. Of course, the wrongdoer is the primary culprit for the incident, but the organization responsible for protecting the data may also be held liable. In many instances, the actions (or lack thereof) of an organization and its employees contribute to the severity of a breach, and as such, they are held at least partially liable.

Recent technological developments have made IT liability even more complex. While the rise in remote and hybrid work structures has introduced more access points and vulnerabilities to networks, artificial intelligence technology has simultaneously allowed cyber attackers to become more sophisticated in their attacks. Businesses must include these considerations in their IT contracts, or they could risk significant consequences, such as lawsuits, fines, or worse.

How to reduce IT liability

One of the first steps a business can take to reduce its IT liability is to implement strong cybersecurity measures. In the case of a data breach that leads to legal consequences, an organization wants to show that it has done everything reasonable and within its power to protect the data. Some essential cybersecurity measures that organizations must implement include:

•Multi-factor authentication: Passwords alone are no longer enough to secure sensitive data. Multi-factor authentication (MFA), which requires an additional verification code via email or text or a third-party authentication app, allows organizations to verify users’ identities more confidently.

•Secure endpoints: Another essential cybersecurity measure businesses should implement to reduce their IT liability is securing endpoints — any devices used to access the organization’s networks and data. Basic antivirus and anti-malware software are inexpensive and essential investments, especially in an era when employees are increasingly relying on personal devices for work.

•Network security: Organizations should also ensure that cybersecurity measures are implemented on a network level. Defense measures like firewalls, intrusion detection systems, and intrusion prevention systems provide the minimum protection needed to keep data secure. Without these features, organizations could be found neglecting their data security.

However, even businesses that have the most stringent cybersecurity measures in place could fall victim to attacks that get past these measures of defense. Because of this, it is vital to have an incident response plan in place to address potential breaches and limit liability for incidents. If a business fails to appropriately address a breach that causes further consequences, it could be held liable for its negligent response in addition to its negligence in creating the conditions that caused the attack to occur. 

By having an IT incident response plan in place, businesses and their IT teams can act quickly to patch flaws. Once a vulnerability is identified and exposed by a wrongdoer, others can follow suit and take advantage of this weakness. Unfortunately, even for some of the most well-known security risks, many organizations neglect to patch their vulnerabilities, exposing them to massive cyberthreats. This can be the difference between a minor data breach that is easily recoverable and a massive breach that has catastrophic consequences for an organization.

Protecting against IT incidents

However, as important as it is to be prepared for a cybersecurity incident, it’s even better to take a proactive approach and prevent these incidents from occurring in the first place. It’s crucial to ensure that all software and hardware are kept up to date because updates often include essential patches that fix vulnerabilities exploited by wrongdoers. Failing to stay current with these changes could leave you susceptible to an attack that could have been easily prevented.

The other aspect of a proactive cybersecurity approach that can help reduce a business’s IT liability is educating employees. Ultimately, your employees are your first and best line of defense against cyberattacks. Employees should be trained to identify and report cyber threats. 

The actions of a well-trained employee can stop a cyberattack before a perpetrator ever gets a chance to access valuable data.

Indeed, the best way for an organization to minimize its IT liability is to prevent IT incidents from happening in the first place. By implementing cybersecurity measures, having a strong IT incident response plan, being proactive about keeping hardware and software up to date, and educating employees, businesses can reduce their risk of severe consequences and, in turn, their liability.

 

 

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