The Texas local governments attack seems to me to be more akin to the trend we have been seeing in 2019 with attackers targeting one MSP and then using that access and the MSP’s tools to attack / encrypt the MSP’s individual clients. If I’m not mistaken (and, I could be), the Texas DIR often acts as sort of a provider / MSP or/ MSSP to some local governments by providing outsourced services to those local governments.
In a recent Wall Street Journal article, The Case for Protecting Small Firms from Cyber Lawsuits, the authors argue that, because smaller companies lack the resources of larger companies when it comes to protecting data, smaller companies should have legal protections to exempt them from facing the consequences of these laws.
While it seems this argument is based on a fundamental misunderstanding of the purpose of these laws, it does offer some productive suggestions and I found it interesting for another reason. The reasons the authors gave for arguing that smaller companies should be exempted from the laws are some of the same reasons I give to smaller companies when I explain why it is so important that they have appropriate cyber insurance coverage:
Small businesses have the same obligations to protect data that larger companies have.
Breach notification laws may have penalties of a certain cost per record breached, regardless of fault.
Breach notification laws may require notifying those individuals whose data was breached, that their data has been breached.
Breach notification laws may require providing identity theft protection services to the individuals whose data was breached.
Individuals whose data was breached may sue and seek recovery of damages and legal fees.
I have been practicing in the cybersecurity and data privacy areas of law for nearly two decades and have served as breach guide to hundreds of companies — one of the biggest lessons that I have learned in all of these years is that in many cases, it is not the initial incident that causes most of the harm, it is the failure to properly respond to the initial incident after learning about it that causes it to escalate.
Incident response is expensive. The legal fees, the fees for security services, forensic services, remediation, public relations, and identity theft protection, notification of consumers, and reporting to regulatory agencies — all of these things are very expensive but they are mandatory to properly respond to an incident, in most cases. When a business does not have the resources to pay these expenses, it is not able to properly respond to an incident and that is what can be most devastating of all for small and midsize businesses. That is why it is so critical that small and midsize businesses have appropriate cyber insurance coverage to step in and provide them with the resources needed to help manage and properly respond to such incidents.