Recruiting and staffing companies manage a significant amount of sensitive data, including résumés, background checks, social security numbers and financial details, making them prime targets for cyber threats.

A data breach can expose this sensitive information, leading to legal liabilities and financial losses. In the event of a cyber attack, here are five ways cyber insurance can protect your firm.

Recovery costs. Cyber insurance helps cover the costs of data recovery, notification requirements and potential lawsuits.             

• Global average cost: According to IBM’s 2024 Cost of a Data Breach Report, the global average cost of a data breach is approximately $4.88 million. This figure includes direct costs like detection, investigation and response as well as indirect costs such as reputational damage and customer churn.

Third-party liability. Staffing companies often work with other businesses, handling their employees’ and candidates’ data. A cyberattack that compromises this data can result in liability for damages to clients. Cyber insurance provides coverage for third-party claims arising from breaches affecting client information.

Business interruption coverage. A cyberattack can disrupt the operations of a recruiting firm, especially if it affects the firm’s databases, communication channels or website. Cyber insurance can help cover the loss of income during downtime and the costs of restoring normal business operations.

• Global average cost: The average total cost of a data breach in smaller companies (500 employees or less) increased from $2.92 million in 2022 to $3.31 million in 2023.
• Ransomware attacks: For ransomware, which often causes extended downtime, the average cost of business interruption is notably higher. The average ransomware payout has increased to $1,542,333 in 2023 from $812,380 in 2022.

Phishing and ransomware threats. Staffing and recruiting firms often receive high volumes of emails, making them vulnerable to phishing attacks that can lead to credential theft or ransomware attacks. Cyber insurance can help cover the costs of dealing with such incidents, including ransom payments (where allowed), data restoration and legal fees.

Regulatory compliance and fines. Staffing and recruiting companies are subject to various data protection laws. A data breach could result in hefty fines for non-compliance with these regulations. Cyber insurance can assist with covering regulatory fines and the costs of regulatory investigations.

In today’s digital landscape, cyber insurance is a critical tool to mitigate the risks associated with cyberattacks and data breaches in the recruiting and staffing industry.