Tuesday, September 6, 2011

Liability from Breaches of Confidential Business Information

I came across a great article in the Business Ventures newsletter, published quarterly by the Fairfax County Ecomonic Development Authority.  The article, "The Importance of Protecting Confidential Business Information" by Brian Darville of Brocadiant IP PLLC, discusses the value of trade secrets and the potential liabilities that result from theft, disclosure or misappropriation of such information.

The full article can be found at this link.  It's a .pdf, so scroll to page 3. 

I am a liability nerd, and information security is one of my hot buttons.  This article naturally caught my attention.  Security breaches expose information:  Social Sec. numbers, Credit card numbers and potential Trade Secrets.  Once the info is exposed, the affected parties can file claims against the company that was hacked for failure to properly secure it.  The companies face fines, damages and attorney fees.  If you are one of these unfortunate companies, your General Liability policy will not cover this.  Electronic information is specifically excluded in most Liability policies. 

Network Security or Cyber Liability policies will respond to such claims.  I've included some information about these coverages in a previous post.  Find it here.

If your company maintains this info. on your server (and all companies do), take steps to protect it.  Have Tex, an IT service provider, recommends 10 best practices to lock up your information exposure.  Read this and commit it to memory:

Top 10 Ways to Keep your Business Data Safe

Good luck!  Don't hesitate to reach out if you have any questions.