As a franchise business operating in today’s digitally connected world, your business faces several cyber liability risks. Typically, most franchisees do not consider themselves at risk for a cyber attack and have failed to take measures to secure their systems and data.
For franchisees like you, cyber crime is expensive, causing damage or destruction to your digital files, stealing time and money away from your franchise business, and defrauding customers through the theft of their personal and financial data stored on your computers.
Costs balloon even more when you consider the risk of business downtime, expert IT support, business restoration, regulatory actions, potential judgements and reputational harm.
Common Cyber Liability Risks for Elevanta Franchisees
The most common cyber liability risks for Elevanta franchisees are:
Wire Fraud — A scheme to defraud or obtain money based on false representation or promises.
Wire fraud often targets franchisees in business to business transactions for investments, goods or services.
Social Engineering — A tactic often employed by cyber criminals for confiscating confidential information through manipulation of a person or business.
Social engineering can be used against franchisees to gain access to a franchise’s finance records or customer financial data by tricking an employee into giving the criminal access. Franchisees are at risk of social engineering attacks through business email compromise (BEC) scams.
Ransomware — A type of malicious software designed to block access to a computer system until a sum of money is paid by the victim.
Hackers can infect your systems through emails, downloads, filesharing or compromised websites. Ransomware can be used against a franchise’s local computer systems as well as franchisor systems your business depends on, locking up operations for days or weeks and impacting your reputation with customers.
Protection from Common Cyber Liability Risks
Franchises affected by wire fraud, social engineering and ransomware attacks have lost millions due to the interruption of their business operations and hit to their reputation. Here are ways to protect against the three key cyber attacks:
- Protect against wire fraud
- Require approval of transactions by both parties.
- Verify by calling the phone number already on file and never confirm by email alone.
- Use a secure, dedicated computer for transfers.
- Enable email encryption to protect communications.
- Separate duties, limiting the overlap of duties related to financial transactions.
- Review account statuses frequently, looking for anything out of the ordinary.
- Train all staff thoroughly on computer safety and funds transfer best practices.
- Treat all emailed transfer change requests as potential fraud and verify and validate the payment details before proceeding.
- Protect against social engineering
- Train managers on social engineering fraud risk.
- Control access to payment and transfer details.
- Never share confidential info over phone or email.
- Verify customer or vendor info for change requests.
- Always call ahead before making any large transfers.
- Double-check account numbers before you hit send.
- Protect against ransomware
- Train managers to recognize ransomware attempts.
- Backup systems securely with offline storage.
- Always install new security patches and software updates as they become available.
- Turn on two-factor authentication for login access.
- Scan and filter email and web traffic for better safety.
- Monitor the network for unusual or suspicious activity.
- Limit access to protect employees and company data.
- Create an incident response plan to minimize risk if an attack does occur.
Protecting Against Common Cyber Liability Risks for Franchises
Franchisees should remember that even with the best training and safety practices, it’s still possible to become a victim of cyber crime. With the rise in cyber attacks against franchise businesses, it is important to protect against the costs associated with these attacks by purchasing the necessary insurance coverage.
To combat the risks, Lockton Affinity offers Cyber Liability insurance with flexible policy limits that helps cover:
- Cyber extortion and ransomware
- Business interruption expense and extra expense up to full policy limits
- Notification costs and more