Research and Development, Trade Secrets and Proprietary Information 

• Do you use laptops and cell phones within the scope of your business? Of course you do! Picture this: A key employee leaves for the day with their work laptop. Later that night, that employee’s vehicle is broken into and their laptop stolen. How do you have information stored and protected? Can this criminal gain access to your data and learn about your unique processes or ingredients?
• This about the intellectual property of your organization has developed and maintained. This is anything from specific crop trade secrets, cannabis product recipes and formulas, or other R&D plans. This is what gives your business a competitive advantage in the budding industry which is why it is important to safeguard it with both proper cyber security measures and a cyber liability policy.

Social Engineering and Wire Transfer Fraud 

• Imagine that you or one of your employees receives a message from a packaging vendor you work closely with that you need to update your payment methods. The email (or phone call) appears legitimate and instead of verifying this request – payments are submitted to the new account. You eventually learn this vendor didn’t actually request a change in payment method when your packaging was not received. Unfortunately, you have fallen victim of a bad actor preying on human nature to initiate a wire transfer via a social engineering scheme. You can read the announcement of social engineering attacks against MRA licensees here.
• Social engineering is the art of manipulating people and encouraging them (in good faith) to divulge sensitive or personal information. Take this one step further with the “authorized” wire transfer of funds. Learn more about social engineering in our previous blog.

Cyber Extortion and Ransom

• Picture a multi-location cannabis operations suffers a cyber breach to their network. This breach leads to the network locking up and the backup systems across all locations to fail. Your organization is unable to continue with day-to-day business activities until a ransom of $50,000 is paid and the lock is released. How will you pay for this?
• Ransomware and extortion are a common cyber incident where some kind of payment is demanded in exchange for the release of data or your systems.

Multimedia Liability

• As you’re opening the mail, you receive a “cease and desist” demand letter alleging copyright infringement after using an image found on a Google search. After using this image on your website and other promotional materials, the copyright holder and owner of the image requests that the image be removed. Additionally, they have demanded compensatory damages for the use of the image.
• This component of a cyber liability policy provides coverage for third party claims resulting from dissemination of online or offline media material. These include claims alleging libel, slander, plagiarism, copyright/trademark infringement or personal injury.

Privacy Laws, Regulatory Defense and Fines/Penalties

• Think about any of the cyber incident examples above where you may suffer “first party” financial damages. Upon review of the cyber breach, one regulatory body alleges that your business did not notify those who had their sensitive data leaked. Your business is not forced to pay a large amount out of pocket for notification to each individual as well as regulatory compliance checks and financial penalties.
• What happens when you experience a breach and data of other businesses and individuals is potentially stolen? With the right cyber liability insurance in place, you can have support to not only handle a breach but begin paying for the notification expenses and hopefully avoid future fines. 
• Furthermore, your business is handling so much data and information that often times includes access to medical history for cannabis patients. So is your cannabis business subject to HIPAA compliance? This remains a bit of a gray area due to the federal legality of the product however, this is another reason to protect your information and business with cyber liability. 

Business Interruption and Dependent Business Income

• What happens when your systems are attacked or disrupted due to a cyber incident? The rest of your business duties carry on but are you able to continue following an attack? What happens if you’re unable to control automated processes or take payments during this time?
• Often times, business continuation is overlooked when considering cyber risk. This is excluded from your commercial property policy however the right cyber policy can help with the continuation and reimburse you for the lost sales during this time.
• It can also help if one of your dependent vendors suffers a cyber attack that impacts your business directly.