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The digital dilemma: Dealing with risks directly

01 September 2020 Bertus Visser, Chief Executive of Distribution at PSG Insure

For Directors and Officers (D&Os) of a business, there are plenty decisions needed in any given day, and some of them can have far-reaching consequences.

As Covid-19 has taken hold of the economy, the chance of fraudsters trying their luck has increased. In the digital age of social media, risks are tenfold. Embracing a strong digital strategy, cyber protection, and sufficient short-term insurance is the trifecta to navigating the now and always.

Recently, Simon Colman of SHA Risk Specialists outlined some essential considerations at an informative client webinar session hosted by PSG Insure. D&Os have a lot to think about, including the risk of litigation; is there a chance the business could get sued, and is there protection in place? You might think because you are a Pty (Ltd.) you are immune, but you have responsibilities and if you fail, could become personally liable for the losses suffered by stakeholders.

Setting the scene

Imagine an unsavoury customer tries to fake a fall on the premises of a shop, in the hopes of suing the business on the grounds of a slippery floor, for financial gain. Mitigating this risk becomes much easier if there are CCTV cameras that can capture a staged incident like this. Other ways a business can manage its risk would be to monitor social media (in case negative things are being said that put your company or brand’s reputation at risk), quality control and staff training (is your shop floor safe, and do staff know what to do if an incident occurs?); which leads into having an incident reporting system firmly in place (that staff know how to follow too).

One shouldn’t only think about the “slippery floor” of course. Consumer fraud can occur in many different ways. Here are some tips to mitigate risk.

Get with the program

Many businesses are social-media shy, but whether or not you have a digital presence, people are going to discuss your business online. You may as well be part of that conversation to avoid being caught off guard.

Colman noted that many of us are still working from home, often with connectivity issues and some businesses have let cyber-safety lapse. Allowing employees to copy data on to their devices, is less secure than if it remains in the office, and you should be aware that employees may have personal habits at home that don’t align with company data security. An example might be a lack of anti-virus software on their personal computers, which may have been needed to be used during lockdown.

Colman says that people who are not used to working from home can become complacent, and this has contributed to an increase in cyber-attacks.

Get protected

Imagine someone changed the locks on the door to your business premises and refused to give the key back until you pay a ransom? That’s how ransomware works. You are locked out of your data until you pay the criminals. If you are caught out like this and fail to have any back-ups, you could be in big trouble. Your anti-virus subscription is among your essential business expenses, as well as using Virtual Private Networks (VPNs), and ensuring employees are properly trained.

Assessing vulnerabilities is also an important exercise. “A security vulnerability test is like having someone walk around your office looking for loopholes and weaknesses, but digitally,” Colman says. Sadly, SMEs are often the most vulnerable.

Get smart

“We’ve all seen the emails from a long-lost uncle in Nigeria who has left us $1 million.” These are a lot easier to spot as scams, but smart criminals will find ways of impersonating email contacts, or other means to get access. “SHA surveyed 200 SME businesses in 2019 and found that almost a third of business owners paid the ransom with 20% falling victim a second time. Just hearing about this should make all business owners wise up to needing proper cyber protection.”

There is no silver bullet or single solution for dealing with these new risks. Directors should chat to their brokers to find the right combination of cyber and directors and officers insurance, to make sure they are adequately protected.

 

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