Can Cyber Insurance Protect My Accounting Firm?

Can cyber insurance protect your accounting firm? The short answer to that questions is a resounding "Yes," but the long answer is a little more involved.

First and foremost, it's essential to understand that cyber insurance is a form of protection but not a form of cybersecurity. Said differently, cyber insurance for CPAs helps accounting firms recover after cyberattacks. But it does nothing to help them avoid said cyberattacks in the first place. As helpful as cyber insurance is, it's only one component of a comprehensive cybersecurity strategy.

Accountants must also understand that different policies provide different types coverage; along with different limits/deductibles. Luckily, providers are happy to partner with businesses to determine what threats they face and how to tailor coverage to match needs. Once the right coverage calibration is achieved, cyber insurance provides an expansive layer of protection:

- Investigation Expenses "“ This is one of the most expensive and under-discussed consequences of an attack. Launching an investigation is the only way to know how an attack was carried out, what assets were compromised, and what degree of liability the accounting firm faces. It's also essential for closing vulnerabilities and avoiding future attacks. Cyber insurance is available to cover investigation expenses so that firms are not left bewildered after an attack.

- Public Relations "“ The long-term damage of an attack is often more expensive than the immediate damage. In the wake of a data breach, accounting firms are sometimes seen as unsafe or unreliable. That is an untenable reputation for a firm that leads directly to lost clients and a shrinking bottom line. With cyber insurance, the cost of hiring a public relations firm to manage an incident response is covered in part or in full.

- Client Assistance "“ Simply pledging to do things better is not an adequate way to recover from a cyberattack. Especially if a firm is hoping to keep its existing clients. Providing services and support like credit monitoring to clients who have been affected goes a long way toward rebuilding bridges. Cyber insurance policies will cover the cost of support services according to various terms and conditions.

- Legal Support "“ Even a modest cyberattack can necessitate hiring a lot of lawyers. This is especially true if an attack leads to a wave of lawsuits. Unfortunately, this has a strong likelihood considering the sensitive nature of accounting data. Don't let legal costs compound the financial hurt of an attack. Make a smart decision before an attack takes place. Accounting firms would do well to take out cyber insurance policies that include coverage for lawyers' fees and settlement costs.

- Lost Business "“ A cyberattack that disables systems or holds data hostage may cause operations to grind to a halt. And even if business is not directly interrupted, the response to the attack often puts business relationships in jeopardy. Cyber insurance steps in to compensate CPA firms for any lost revenue directly related to an attack.

Accountants must ask themselves two questions. First, are you completely confident you're immune to a cyberattack? Second, if not, are you completely confident the firm would survive a cyberattack? Don't be foolhardy. Cyber insurance for CPAs is an essential protection.

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