In 2020, remote working saw a sudden spike and hacking small-medium size accounting firms has become quite prevalent in the USA.
Bad actors and cyber criminals target accountants due to their access to their clients’ most privileged information – their financial records!
Such information has a high market value on the dark web and more than 60% of small-medium size companies go out of business within six months of falling victim to a cyber security attack.
A fast and cost effective solution for accountants, bookkeepers and CPAs to reduce the effects of cyber attacks like ransomware, data breach, regulatory fines, phishing attempts and social engineering threats is cyber liability Insurance. Financial services business owners use a cyber liability policy to minimize the disruption in their business by covering the direct costs of a cyber breach, legal fees and damages while maintaining their business reputation.
Here are the top 6 reasons why cyber liability insurance is a must for any accountant.
- Vast access to personal information
Most hackers attack accountants because they have detailed information about their clients, including their social security number, address, date of birth, phone number, and their year-end financial information, including the client’s account number. Hackers can sell this information to competitors, blackmail your clients, pursue identity theft, or other unethical frauds.
- Accountants act as a gateway to sensitive information
Most self-employed accountants have a ton of personal and financial data about their clients. Hackers want to intercept this data and get as much information as possible to commit complex frauds. Accountancy firms are considered a gateway to access this sensitive information to understand better the business they will target for a cyber attack.
- Poor cybersecurity measures
Private accounting firms usually do not invest in advanced and expensive cyber security software or a dedicated cyber security officer in charge of securing their laptops, desktops, or mobile phones. These small businesses are a ‘soft target’ for hackers as they have an insecure, un-updated version of software installed on their devices or use a weak email password. Most accountants are unaware of social engineering threats and the dangers of clicking phishing links sent by emails or direct messages to their mobile device causing them to download malware through insecure websites.
- High cost of compromised data
Accountants have access to clients’ email addresses, making them prone to email-based frauds, which cause the highest financial losses. These scams directly steal money from the bank or stock accounts, along with personal information. Hackers get access directly to net banking via the ‘forgot password’ process. Less informed accountants are also prone to invoice and legal fine scams.
- Extortion payments
Cyberattacks can steal the control of your accounting firm. When you click on the wrong link or plugin a random flash drive to your system, the ransomware can seize control of your system and steal proprietary data. Such hackers usually extort small accounting firms for money in exchange for keeping the data private and getting everything back to normal. Cyber insurance would help you handle and help you pay the ransom amount.
- Third-party lawsuits
When hackers attack an accounting firm, clients’ personal and financial information leaks onto the dark web. Hackers can use this information to extort customers and access their health records, phone numbers, tax information, or social security numbers. In such cases, clients can file a lawsuit against the firm, accusing them of unreliable security measures.
Cyber insurance covers the cost incurred due to such lawsuits and helps firms pay any fines or penalties resulting from them.
Takeaway
Protecting your client’s personal data should be your topmost priority. You can stay safe from minor cyber attacks by implementing simple measures like installing anti-virus software, setting strong passwords, updating your operating systems regularly on time, and providing cyber education for your employees about phishing.
However, as cyber attackers are becoming more sophisticated day by day, there is still a chance your accounting firm can get hacked, and your data can be compromised and leaked. Insuring your firm with cyber liability insurance would protect the viability of your business, along with ensuring that you none of your employees face any legal implications.