In the modern world’s digital environment, all businesses face the risks of cyber attacks and one of the most vulnerable is CPA firms. They keep a large volume of sensitive and confidential records which are very attractive to hackers. This is the reason why accountant professional liability insurance is very important to mitigate the risks of serious financial losses.
The most common type of cyber attack that many firms were subjected to is ransomware. Many businesses as well as CPA firms were forced to close their doors because of the digital onslaught. Those who became victims of ransomware spent exorbitant amounts of money and lost some of their clients to competing firms that were proactive with their security measures.
Several years ago, CPA firms were rather sceptical about getting cyber insurance but today, the common question is how much they are going to spend for cyber insurance. Some say that the benchmark is about $1 million for 100 professionals but if you will compute based on the average breach costs all over the country; it would be about $4 million. However, this is only a generalization that is irrelevant to a firm that wants to protect its reputation.
Methods used to attack computer systems are ingenious. Two of the main avenues that are exploited are kits and compressed email attachments. Last 2016, an accounting firm had to shut down for 4 days before the end of the tax season because one of the junior staff inadvertently downloaded an infected Excel macro. Removing ransomware is easy for expert IT’s but files cannot be unlocked without paying the ransom asked.
First party cyber insurance coverage can cover the costs of credit monitoring, client notification and restoration of the network. However, it is worth noting that accounting firms may have different situations which may require a different type of coverage.
Cyber security is important to accounting firms but they should not overlook accountant professional liability insurance that provides protection against substantial tax investigation fees that will be incurred for the client. Insurance will cover the costs of the processes that are being made to make sure that the business or taxpayer is in compliance with the tax requirements.