Protecting your business On Line



It's hard to think that only 20 years ago news breaking on the other side of the world took up to a day to reach our shores. Nowadays it can be instantly transmitted to your mobile device with graphic images and eye witness accounts. We are dipping into Twitter and find it fascinating that when you hash tag a word a whole new line of conversation opens up that may or may not be related. Friends are everywhere and available 24 / 7, when 20 years back the annual Christmas letter or twice a year letter to your 'Pen Pal' was about as close to Twitter as you could get.

As our world becomes smaller in ways of transmitting data it has opened up new industry. The electronic data transfer industry is one of the faster growing on earth. Just look at how a young lad named Mark Zuckerberg went from a computer programmer to one of the richest men on earth after creating Facebook. 

Insurance has always had to evolve to protect business from new risks. Starting in it's simplest form hundreds of years ago it has rapidly developed new products and levels of cover to help progress. Yes I said help progress! Without a strong protection plan behind any major idea or business then industry fails. Why else is the Insurance industry regulated in such a way to ensure all Insurance companies in Australia have a minimum level of capital and stringent requirements to hold their Financial Services Licence. As much as governments often blame Insurance companies for a number of things, they would be the first to agree that a weak insurance market leaves a countries economy exposed. Without it how would we have recovered from 2 years of catastrophes in Queensland.

So as industry evolves Insurance companies look at devising new products. In the Information Technology sector it is frightening what can wrong. Insurance fraud used to be a physical thing that could be traced to a source, nowadays fraud is done online and through a tangled web that can be hard to trace.

It's important if you are receipting credit card details over the Internet for example that you have stringent checks and balances on those handling the orders. A recent case saw employee's of a company defraud their employer and their customers of thousands of dollars by redirecting or short changing incoming payments. Some of them never even were processed and redirected to personal bank accounts. Who is handling electronic cash in your business? Every business owner needs to understand the terms and conditions of taking credit card transactions and follow the rules no matter what. With on-line banking being the norm and more and more Internet sales taking place, basic risk management procedures are necessary to protect a business from scams such as this.
From the insurance angle, hoax and trickery are basic exclusions under many business packs and similar wordings. Some specialist policies do cover this sort of event, but prevention is always better than cure.

Information and Communications Technology Liability Insurance (ICT) is a product that is becoming rapidly more and more a staple of a companies Insurance program. Still many companies dealing on the Internet do not take the cover out.

Think about it, any company that develops, manufactures, licences, sells, provides, advises, integrates any form of ICT and related services is exposed to litigation. Irrespective of the potential liability costs to compensate a customer the cost of legal representation alone is staggering and may cripple a small company even if they are found to have not been negligent. I personally can rattle off 4 or 5 companies in my own patch that fit this bill.

What can go wrong? Well what if you innocently breech a copyright or trademark law? What if the product or online service you are providing fails and potentially releases personal information of your clients that lead to their economic loss? Do you know all the pieces of legislation surrounding the online presence of your company? I can tell you right now..... I don't!

http://australia.gov.au/topics/australian-facts-and-figures/law-and-legislation is a good place to start.

So whether you are web hosting or simply taking credit card orders electronically it's important to know what can go wrong within your own business (fraud) and to your customers. An ICT Liability policy can replace your current Liability section of your business package. Depending on your personal activities it can be only minimally higher in premium then your current public liability. But when you consider the litigation costs and potential exposures, paying a little more to progress your business online is a small price to pay.

 
 
** This information is General Advice only and does not take into consideration any individuals personal circumstances. Please contact your adviser to discuss in more detail. Some information referenced via QBE Australia, LMI Group & australia.gov.au 
 

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