Data breaches that make news headlines are becoming an unfortunate aspect of business life. In mid-2017, two massive data breaches directly impacted San Diego: the Hard Rock Hotel and a Southern California office of the California Association of Realtors. In these two incidents, the personal information and electronic payment data of guests and clients were compromised, a situation that could put thousands of people at risk of identity theft and fraud.
According to a recent report published by the San Diego Union-Tribune, data breaches across the United States have increased by 29 percent compared to the previous 12 months. This comes to an estimated 12 million personal records stolen by hackers and cybercrime groups thus far in 2017.
For the most part, only the most spectacular data breaches tend to make headlines. We know about the network intrusions at Sony, HBO, Target, Bank of America, and other major companies. However, it is worth mentioning that 43 percent of all cybercrime is perpetrated against small businesses.
A 2016 report by an insurance company that specializes in providing coverage against cybercrime losses revealed just how damaging data breaches can be for small businesses. The staff at American Tri-Star, a trusted provider of commercial insurance in San Diego, discusses a few of these potential damages.
Depending on the intentions of the cybercrime perpetrators, a data breach can involve more than just the theft of customer information. If the attackers are able to install rootkits, which tend to go undetected, they may be able to disrupt the network infrastructure and permanently destroy data. Destructive cyber-attacks are often carried out by hacktivist groups. Recovering from these incidents may cost thousands of dollars.
A bowling alley that experienced a breach of credit card payment information last year was eventually forced to pay more than $60,000 in fines imposed by merchant processors, banks, and payment networks.
A travel agency and a restaurant named in the aforementioned 2016 report paid more than $25,000 in audits and legal expenses after network intrusions compromised private customer data that could have been used for identity theft.
When a data breach affects a business covered under Health Insurance Portability and Accountability (HIPAA) laws, certain guidelines must be followed if patient records are compromised. In 2016, a health clinic spent more than $30,000 in HIPAA compliance fees after a cyber-attack on their servers.
This can be one of the most damaging consequences of data breaches for small businesses. For a company such as HBO, dealing with leaked scripts and episodes of their hit fantasy drama series Game of Thrones is relatively easy because they own exclusive broadcast rights. Small business owners are not so lucky in this regard. If a San Diego surf shop falls victim to a data breach, customers are likely to flock to other shops and spread the word across the local surfing community.
The right insurance can protect a business in the event of a data breach. Get in touch with Tri-Star Insurance today to make sure your business has an adequate level of coverage. In addition to commercial insurance, we also offer health, homeowners, bond, and auto insurance in San Diego. Call 619-272-2100 today to speak with one of our knowledgeable agents.