We Sell Closeouts. Do I Really Need Cyber Insurance?

According to Traveler's Insurance, “every type of organization, from global companies to mom and pop shops that use technology to do business, face cyber risk. As technology becomes more complex and sophisticated, so do the threats that businesses face”.

Cyber liability insurance covers the cost for a business to recover from a data breach, virus, or other cyberattack. It also covers legal claims resulting from the breach. Any business that stores sensitive data in the cloud or on an electronic device should have cyber liability insurance. This means if you liquidate inventory and have a computer system in your office, you may be vulnerable. Companies that sell excess inventory and obsolete goods may be just at much at risk as a dental office. It isn't so much what you do, as the process you use to do it.

The reality is we all need computers and internet access to run our businesses. Closeouts may even put us at a little higher risk because we are always having to work with people we don't know, read their emails and open unknown attachments. If you sell excess inventory and closeouts this can be particularly frustrating. We are always having to open emails from sources we don't know and this opens us up to attacks. There are numerous ways that a cyber breach can occur. For example, hackers can send phishing emails to customers in which they masquerade as your company. If a customer clicks on a link in the email, the hackers can steal information. Or a hacker might use a virus or ransomware to corrupt your data files. When dealing with obsolete goods and surplus merchandise it is essential to protect your data files. There are so many transactions including purchases and sales, that if this data were ever lost you likely would not be able to recover it on your own. When we liquidate inventory it is not unusual to receive hundreds of new items per week and this data is all stored in our computer system. There are so many different closeouts we are forced to keep all the details, costs, history and more, all stored in the computer.

In addition to considering a cyber insurance policy, small businesses may consider doing a better job of protecting their data. In order to run a company that sells closeouts and liquidates inventory we are required to keep all kinds of data in our system. Most of the data itself is not useful to hackers, but if they breach your system there will likely be other valuable data they can get their hands on.

The main way to protect yourself from cyber attacks is by using strong passwords. So as an illustration of this, if your company sells obsolete goods and your main business is to liquidate inventory, you don't want your password to be “liquidate” or “excess”. You want your passwords to randomly include lower case, upper case, numbers and symbols. You should also regularly update your passwords and software. You can sell excess inventory without the constant threat of losing data if you protect yourself.