Cyber criminals are targeting tax professional systems to access taxpayer data. There is much talk addressing consumer concerns, but little is said about protecting the tax professional from the impact of a data breach. A study sponsored by IBM and conducted by the Ponemon Institute released in June 2016 found the average cost of a data breach is $221 per lost or stolen record. At this rate, a tax preparation business with 350 client records can expect to incur a cost of $77,350.
A data breach within your tax business will set off a flurry of spending on technology resources, legal advice and required client notifications. It can generate regulatory and payment card industry fines and penalties, client and vendor litigation and legal defense expenses.
In addition, the distraction will serve as a significant disruption to your business and result in lost revenue.
If you are not prepared, this combination of events can destroy your business.
The aftermath of a data breach will involve the following:
- Bring in computer experts to assess and remedy the breach
- Consult legal counsel to understand your regulatory requirements
- Notify customers, clients, and regulators
- Provide credit monitoring services
- Pay any fines or penalties required of you
- Legal defense expenses
- Lost profits and business interruption
Typical Errors and Omissions insurance may not appropriately protect your business from the effects of a data breach. Consider securing specific coverage to protect your business.
With limited underwriting requirements, the EROCyberSecurity.com solution was developed specifically for tax professionals to assist with this challenge. It provides coverage for the financial risk to your business, as well as access to the industry leader in data breach response services. For more information and to enroll, visit www.erocybersecurity.com.