Digitally transforming your business? Beware of the added IT risks
If the COVID-19 pandemic has had one good legacy for business, it’s been accelerating the rollout of digital transformation.
The pandemic has fast-tracked digitisation of customer and supply-chain interactions and internal processes by four years, according to McKinsey’s Global Survey of executives. The virus’ impact has also boosted the take up of digital or digitally enabled products by up to seven years.
The survey showed businesses made these changes within a month, on average, including:
- Moving to remote working and/or collaboration
- Increasing practices to bring business operations closer (such as from overseas)
- Speeding up their transition to the cloud
- Using more advanced technologies for operations and business decision-making
- Increasing spend on data security.
About half of businesses surveyed said they hadn’t made these changes before the crisis because they weren’t a top priority.
Funds flowing to IT
In Australia, spending on enterprise information technology is tipped to hit $95.8 billion this year, a 3.6% increase on last year, says research and advisory firm, Gartner. Sectors expected to lead the way are transportation, education, healthcare providers, wholesale trade as well as banking and securities.
A downside is that businesses undergoing digital business transformation might not yet have upscaled their IT governance, risk management, nor assigned senior managers to oversee specific responsibilities.
More tech, more & different risks
Technology investments come with a broader set of risks. They include:
- Business interruption if the technology fails
- Cybersecurity breaches such as malware, viruses, spam, scams, phishing and human error
- Destruction, exposure or corruption of your key documents such as patent applications, employee records, business plans, customer data, intellectual property, etc.
- Criminal threats such as hackers, fraud, password theft, denial-of-service, and staff dishonesty
- Damaged equipment.
Such incidents, including cyber-attacks, could see your operations suffer financial, business or investment loss as you struggle to recover your systems and make up for the lost time. You will also have to deal with damage to your reputation and liaise with customers and regulators over data breaches. Australia’s haphazard regulatory framework for cybersecurity means there are no mandatory best practice minimum-security standards for most businesses, according to the law firm, Norton Rose Fulbright.
As your broker/adviser, we can suggest a cyber liability insurance package for any business with an online presence, and IT liability insurance for businesses that provide IT products or services. A tailored package may include professional indemnity insurance (usually up to $10 million or $20 million cover) as well as public & products liability (up to $20 million cover). It can cover principals, directors, partners, staff, and you can opt to extend that to cover contractors working on your behalf.
We recommend you consider this insurance if you’re a consultant or work in a business which develops, builds, sells, integrates or licenses IT or related services. That’s because offering those services exposes your business or yourself to litigation. IT liability insurance covers you for:
- Civil liability claims that arise from providing IT services, advice, work or performance
- An incident related to your business and/or products which results in personal injury or property damage to clients or a third party.
You’ll even be protected against financial losses from unintentional defamation or the loss of documents or data. You’re also covered for contractual liability, breaches of privacy law such as costs to notify individuals or organisations of violations as well as public relations expenses. Because each business is unique, you may prefer a more customised package, and we can help you with this.
Useful links:
The Australian Cyber Security Centre
Australian Institute of Company Directors – Principle 5: Risk management
Small Business Cyber Security Guide
https://www.cyber.gov.au/acsc/view-all-content/publications/small-business-cyber-security-guide
