US Pro Insurance Services

TARGET’s Data Breach: What have we learned?

Public Relations is Key

In this case, image is everything. Between Black Friday and mid-December, at the height of the holiday shopping season, Target became the latest victim of data breach, closing out a record year of events for such giants as Harbor Tools, Schnuck’s, and Advocate Health Systems, and countless others. However, the national scope and volume of records estimated to have been breached (over 40 million), may make it one of the largest and most costly breaches to date.

A Cyber claim is a complex event which can result in many courses of action. Forensic investigation begins immediately. Legal teams begin the exercise of navigating complex notification laws on a state by states basis as necessary. Customer support and credit monitoring and/or restoration services are implemented for affected customers. In some events, temporary systems may be deployed to minimize business interrupton.

These are just a few of the “wheels in motion” at the onset of a discovered event. So many other actions and reactions are happening simultaneously at the same time few even know about. One of the most important of these items is the Public Relations machine.

Known in the industry as “Crisis Management Expenses”, this function of the Cyber claim is the key to mitigating the potential for economic loss, damage to brand, and harm to reputation. While important to all businesses, this component of responding to a data breach is essential to the retail sales sector that relies on public perception and confidence for its long-term success.

The inconvenience and concern caused to a consumer of a business who fails to protect a consumer’s data has immediate short term reaction, but it is the long-term consequence the business needs to avoid. This is where strong crisis management policies benefit the business the most.

In the case of Target, industry experts, bloggers, and mainstream media agree that Target has done a very poor job in its handling of this crisis, at least externally to the public view. Effective crisis management does not mean that the source of the loss needs to be revealed. Gritty internal forensic details, while juicy in their nature, are not of the concern to the affected individuals or the public at large. Of bigger concern is whether it is now safe, recurrence is unlikely, support is availabe and business is secure. Remember, Target or any other firm has never come out and made such statements prior to a loss. The consumer just assumes that their information is secure, most never even giving it a thought, yet everyday everyone is at risk at any time.

Today, there is real concern and consumer backlash at Target for allowing this to happen. Some of it is due to the event, and some is due to very poor communication with its consumers and the American public. How they respond to this in the coming months, and the public spin they can create, will determine if the long-term consequences of their handling of it will be less harmful than the short-term damage it has created.

I find it ironic that as I write this today, I am one of those 40 million people impacted. Although I have had no personal loss,I have been issued a new card and the work of changing my card information in all of the places I have set up for its use. Not a huge deal, but again, work and hassle and time spent for something I did not ask for. Multiply that times 40 million people and you have a really big problem.

The lesson learned here is that big or small, sophisticated or not, every business is at risk. Having no Cyber coverage, or the wrong coverage form, is very dangerous to business, and a single event can be the cause of a firm’s demise, either financially or reputationally. US Pro is America’s Cyber Insurance Experts! We know all of the forms, we understand all of the exposures, and we write every class from municipal to medical and nonprofits to public companies. We use the leading carriers, we have America’ “QUICKEST QUOTE”, and best of all, we can do a Webinar for you today so that you too can become a Cyber Insurance Expert.

Send us your Cyber submission today to us at and visit us online at to learn even more about this challenging, necessary new product.