How does Covid-19 affect the IT companies?
Following the wide application of „work from home “policy, IT Companies operate in a higher risk environment that can trigger professional liability claims.
The entire world is closely following the development of the Covid-19 pandemic outbreak. The economy is already starting to feel the effect of limited travel, government bans of public gatherings, and widely applied „work from home policy”.
While the impact of limited movement of people, goods and materials in the real sector is obvious it is less so evident for the service sector and namely the IT. The sector has long ago adopted work from home policy as standard and it looks prepared to go through the storm modestly affected. While on the surface of the problem this looks like a reasonable assumption in reality things are different. Let’s review few aspects which increase the risks for IT companies and why they need a Professional Liability insurance.
Breach of confidentiality and/or privacy breach
As already outlined some companies in the IT sector have adopted „work from home“ as a standard policy but does the infrastructure support 90%+ of employees working from home? Is it capable to provide enough capacity to run so many simultaneous VPN connections?
Other companies which have built an infrastructure to support 20% – 30% of the employees to work from home will need to quickly increase the capacity or project delivery times will struggle. Some will choose to apply lower standards.
Adopting lower security standards when the majority of your employees will be working from home increase the risk of data or confidentiality breaches. Proper professional indemnity insurance is a must have to mitigate the financial impact for those companies. For some this could easily be the difference between staying in business and going into administration.
Communication and team coordination may suffer
While the majority of the IT companies do use different project management tools, channels of communication and team alignment meetings, some of the companies still perform better if team members are on-site. Shifting from on-site people management to off-site will require different skill sets in Project Managers and Team leaders. If this is not properly addressed team alignment and project delivery will be put at risk. Some will sacrifice quality to deliver in time. This is a risk which can result in huge financial loses.
Increased staff absence due to Covid-19
If members of your staff do actually suffer from Covid-19 you may be left with decreased workforce to deliver projects in a timely manner. This will force you to overload other members of the team or outsource part of the work to third party vendors. Both increase the risk when acting under pressure if this scenario was not properly assessed in advance.
Increased workload for own staff increases the risk of errors and omissions. Proper QA process is critical in this situation. Lack of robust quality control programme will lead to increased claims for breach of duty;
Outsourcing to third parties without proper assessment of their security policy to cover lack of personnel or to speed up project delivery may create back door entry for hackers. This increases the risk of data breaches or even transmitting viruses (and we speak – computer viruses here) to your clients’ networks;
Remote implementation for on-site planned projects
The travel bans will affect all projects which require on-site work. Some companies will choose to switch to remote completion which performed under pressure or without making a robust and detailed risk analysis may lead to increased exposures in terms of data security. Unsecured channels of communication (even to non-critical information) increases the risk of data breaches.
While IT sector seems to not be as severely hit as the real sector from the outbreak of Covid-19 it does operate in a higher risk environment. The higher probability of breach of duty or leakage of confidential data would lead to increase in professional liability claims. If you have not yet secured adequate Professional Indemnity insurance now is the time to do so. This will help you mitigate the effect of potential claims from your clients or partners. Avoiding to do so will not only put at risk the company but will also be a good ground for other stakeholders to look for compensation from the Executive management.
Reach out to us on +359 876 007717 or mailto:firstname.lastname@example.org in the next 30 days and get a free advice what would be the best solution for your company.