Cyber threats are no longer a distant concern for accounting firms—they are a pressing and immediate challenge. The increasing sophistication of cybercriminals and firms’ reliance on digital tools have created a perfect storm of vulnerability. In this episode of Risky Records, I sat down with Rob Ferrini, Cyber Liability Program Manager for McGowan PRO, to break down why cyber liability is one of the most significant legal and financial risks accountants face today and why comprehensive cyber liability coverage is vital.
Rob shared key insights on why professional liability policies alone are insufficient to protect firms from cyber threats, the importance of dedicated cyber liability coverage, and the essential endorsements firms need to safeguard their operations.
To wrap up, we enjoyed a classic album from my Vinyl Vault: Steve Winwood’s Arc of a Diver, a favorite of Rob’s that set the perfect tone for our discussion.
Why cyber liability coverage is a growing necessity
Accounting firms are prime targets for cybercriminals due to the sheer volume of sensitive financial and personal data they manage. Cyber risks continue to grow due to several evolving factors:
- The rise of remote work has expanded attack surfaces, increasing firms’ exposure to cyber threats.
- Ransomware and phishing attacks have become more advanced, making them harder to detect and defend against.
- Regulatory requirements continue to evolve, holding firms accountable for securing client data and responding appropriately to breaches.
- Third-party vendor risks add another layer of vulnerability, as many firms rely on cloud-based software and external IT support.
With these challenges in mind, cyber liability coverage is no longer optional—it is a necessity.
Also read: The 2025 Outlook for Cybersecurity Trends
What to look for in a cyber liability policy
Not all cyber liability policies are created equal. To ensure comprehensive protection, accounting firms should seek coverage that includes:
- First-party coverage to cover direct costs such as forensic investigations, data restoration, and business interruption
- Third-party coverage to protect against legal claims from clients affected by a breach
- Protection against ransomware and extortion to help firms recover encrypted data and respond to ransom demands
- Regulatory defense to provide support in meeting legal requirements after a breach
- Social engineering fraud protection to cover financial losses from scams that manipulate employees into transferring funds
- Network security liability to defend against claims that a firm failed to prevent unauthorized access to client data
The high cost of cyberattacks on accounting firms
The financial and operational toll of cyberattacks can be staggering. Firms must contend with immediate disruptions, such as being locked out of critical systems, as well as long-term repercussions that threaten their financial health and reputation. Business downtime can last for days or even weeks, preventing access to essential financial data and resulting in substantial revenue loss. Meanwhile, unauthorized access to sensitive client records can lead to regulatory scrutiny, legal claims, and costly compliance violations.
Beyond financial consequences, cyber incidents severely impact a firm’s credibility. Clients trust their accountants to safeguard confidential financial information, while regulatory bodies impose strict penalties on firms that fail to protect client data, often levying substantial fines. In many cases, affected clients may also pursue litigation, compounding the financial strain on a firm. Cyberattacks do not just cause momentary disruptions—they pose long-term risks that can undermine a firm’s stability and future growth.
How firms can reduce cyber liability risks
While cyber liability coverage provides essential financial protection, firms must also take proactive measures to prevent breaches in the first place. Implementing strong security measures can significantly reduce risk:
- Adopt multi-factor authentication (MFA): Requiring additional verification steps makes it harder for cybercriminals to gain access to accounts.
- Train employees regularly: Cybersecurity awareness training should be ongoing, focusing on recognizing phishing attempts and suspicious activity.
- Keep software up to date: Ensuring all systems are patched and running the latest versions helps close security gaps.
- Encrypt data and back up files securely: Storing encrypted backups offline can prevent data loss in the event of a ransomware attack.
- Work with cybersecurity professionals: Regular security audits and vulnerability assessments can help firms stay ahead of emerging threats.
Also read: How To Conduct A Cybersecurity Assessment
Ensuring your firm is protected
As cyber threats evolve, accounting firms must proactively secure their digital environments. Well-structured cyber liability coverage protects against financial losses, legal liability, and reputational harm resulting from cyberattacks.
McGowanPRO’s Information Security & Privacy Liability Insurance is designed to provide comprehensive protection for businesses navigating the challenging world of data privacy and cybersecurity. This specialized coverage ensures that firms are protected from the financial and operational fallout of data breaches and other cyber incidents, including legal liabilities and the costs associated with notifying affected parties and responding to regulatory actions.
To protect your business from the evolving landscape of cyber threats, connect with McGowanPRO and learn how they can help safeguard your firm’s future.