LAS VEGAS-CUSOs expanding their fee-based services to increase revenues need to be cognizant of the growing risk exposure to professional and cyber liability such expansion creates, one person is warning.
"The current economy has people looking for any reason to sue," said Jim Hunt, CUNA Mutual Group staff underwriting specialist, during the NACUSO Annual Conference here. "Directors and officers of CUSOs must understand the financial and reputational impact a loss will have on their CUSO."
Professional liability could arise from neglect or an act, omission, error, breach of duty, misstatement or misleading statement made by directors, officers or employees of a CUSO. "Even a seemingly small, inadvertent error or unintentional oversight can result in costly legal action against your credit union or CUSO," Hunt said.
Meanwhile, Hunt cautioned that the types of cyber exposures include:
* Privacy rights violations: unauthorized disclosure of other's confidential information.
* Damages to a third party's data.
* Social media errors (Facebook, Twitter, etc.)
* Human errors.
* First-party losses, such as PR and security breach expenses.
"Data security breaches can occur from situations that your chief information officer has absolutely no control over, such as improper disposal of data, lost or stolen electronic assets or rogue employees. One data breach could wipe out your CUSO, if you're not protected," Hunt said.
To avoid these exposures and related losses, CUSOs should first ask themselves a series of questions about their fee-based services, the potential risks they pose, and what steps can be taken to minimize them. These include examining processes and arrangements with third-party vendors.
In addition, Hunt strongly advised CUSOs to protect themselves against errors and omissions and cyber liability losses by obtaining professional liability and cyber liability insurance coverage as part of their overall protection strategy.
