How to Make Sure a Data Breach Doesn't Derail Your BusinessIf you own a business you need to protect your data. Here's how.

It is important to secure the data your business holds. What would you do if it was lost, stolen, or otherwise compromised? Whether you store it yourself or through a third-party vendor in the cloud, it is important to have a plan in placeshould one of these events occur.

"Using data comes with inherent risks" says Scott Harris, Assistant Vice President, Product Development atThe Hartford, an insurance provider that specializes insmall business insurance.

Below are key questions to ask as you develop a preparedness plan as well as information on some of the most relevant data-related insurance policies for your company.

Where do you store your data and how could it be compromised?More than three-quarters of small businesses use cloud services in some capacity, Harris says. Many do so without realizing it, a testament to how thoroughly embedded this type of technology is in day-to-day operations.

Start by reviewing the type of information your business uses or stores using a cloud service, particularly sensitive financial and personally identifiable customer information. A breach "can be a risk when using any cloud service provider," Harris says.

What are the regulatory requirements for protecting sensitive information?There are laws governing the measures businesses must take to protect customer information. (Location matters here, as specific requirements vary by state.) In order to avoid harsh consequences and penalties, "you want to make sure to have the appropriate defenses in place," Harris says.

If a breach does occur, there are also requirements regarding when a business must notify the public, as well as the services it must provide to mitigate damages, such as credit monitoring.

Which insurance products do you need to protect your business?Abusiness owner's policyis a good start. This type of insurance will usually include financial damages from computer viruses that corrupt or expose data stored on a company's own servers.

It typicallydoes notcover "more complex type risks, such as transferring funds unknowingly, data breaches, or cloud service-type exposures," Harris says. As cyber attacks grow more common and the number of risk factors expand, it is important to find coverage that truly meets your needs. This can include adding on an optional coverage to a business owner's policy that protects against data breaches as well as a variety of standalone cyber-security policies.

Depending on the carrier and the plan, "there is significant variability," Harris says. Here are two provisions you should consider before settling on a policy.

• Coverage for any financial losses stemming from a cybersecurity breach.Data breaches can be expensive. "It is important to look for coverage that can help protect you at every stage of the event," Harris says. The Hartford offers Data Breach Response Expense coverage, which can help protect you and your business from the expenses that can be incurred after a breach, such as legal services, notification and credit monitoring services, as well as costs associated with addressing crisis management.
  
• Cyber liability coverage.This type of coverage helps to protect against financial damages should your company get sued by a third-party for exposing private information. "We're talking about civil awards, settlements, judgments, and legal fees, which can be incredibly expensive," Harris says. In most states,cyber security coveragecan be added on to an existing business owner's policy or purchased as a standalone option.

What are your risk factors and what is your risk tolerance when it comes to protecting your data?As a business owner, the most important step is understanding the various exposures caused by your data. From there, you can work with an insurance specialist to design a mitigation plan. Most risks related to data breaches and cyber security "are insurable," Harris says. "It just comes down to asking questions," and determining your tolerance for each individual exposure.

If you're thinking about hiring an employee,click hereto learn how The Hartford can protect your business from unforeseen circumstances and financial loss.