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Posted on: June 23, 2016 by Huntersure
Due to the nature of their work, accountants are no strangers to risks in their daily operations. With the advancement of technology, their practices have been streamlined and simplified, however, this means there are inevitable drawbacks. For example, there are approximately 340,000 data breaches that occur each day, making it critical to find preventative measures that minimize Accountant Professional Liability. Below are some examples of common exposures that accountants face and how to prevent them.
Damage claims.
These exist from both direct claims and cross-claims from a breach. Whether a client or third-party brings a lawsuit against the firm for direct damages they suffered from the breach or a class action is brought upon the victim, these claims can add up quickly. According to Journal of Accountancy, these claims typically allege failure to secure confidential data, resulting in identity theft or loss of business.
Reputational claims.
It’s common that reputational damage will take place after a breach. This means that client relationships can be tarnished and business will be dramatically reduced if the attack is not managed immediately.
State and federal claims.
The majority of states (46) have regulations regarding cyber-attacks. These laws determine how much financial responsibility the victimized company has in terms of indirect costs, direct costs, forensic investigation, credit monitoring, etc.
How does an accountant firm manage these attacks? First and foremost, evaluate the breach and identify what information was stolen. A forensic team can help determine how much data was actually compromised in order to recover quickly. Next, notify the affected clients immediately and consult with legal counsel. This will help to mitigate reputational damage and navigate the firm’s local and federal obligations.
At Huntersure, we offer specially designed programs for accountant firms that provides coverage for third party claims as a result of negligent acts, errors, performance, and services. For more information about our products and services, contact us today at (855) 585-6255.
Posted in: Accounting blog