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Software Liability in the Age of "Flying Data Centers"

Software Liability in the Age of "Flying Data Centers"

Monday, August 24, 2015/Categories: Errors and Omissions / Professional Liability Insurance, Software Liability, Cyber Security

During his opening remarks at Black Hat USA 2015, Jeff Moss, founder of Black Hat, spoke at length about software liability, Threatpost reports.

Moss argues the inevitability of:

  • Software product liability.
  • Mandates by governments.

In a world where Boeing jets are in essence "flying data centers," Moss says, a problem with a piece of software won't just lead to a computer crash. It could lead to a real world crash – the kind with flames and explosions. Consider the Internet-of-Things revolution. The widespread assimilation of software into manufacturing and assembly-line production to make internet-enabled products poses liability questions if something goes wrong.

With bigger (and sometimes physical) perils tied to software, let's talk about the growing business risks – or software liabilities – that can come with faulty programs.

What's on the Horizon for Software Liability?

For years, many software makers disavowed liability with end-user license agreements, saying they aren't responsible for any problems that happen with the software. If anything, this approach only shifts the liability – or lawsuit risk – to the IT consultants that recommend software to their clients. It's simply wishful thinking to assume that technology companies can't be liable for problems with their tech.

And that's a good place to talk about real world risk. Remember that when big, heavy machines are equipped with faulty software, you can wind up with big, heavy mistakes.

As we covered in "How the United Glitch Could Trigger an IT Professional Liability Lawsuit," when United's fleet was grounded on a Wednesday morning, it was due to an outage. Problems with a router led the company to halt all its flights for hours, causing countless delays and infuriating travelers.

It isn't just airplanes that have these risks. We've seen a bunch of stories:

  • Jeep automobiles were recently hacked (see TechCrunch's story).
  • A German missile battery carried out orders that came from unknown hackers (see RT report).
  • A hacker used malware to take creepy photos of a couple snuggling while watching Netflix and posted these photos on the couple's Facebook page (see Vice's article).

Whether it's a software flaw that damages your client's property or one that creeps out a client's customers, these software issues can lead to distress and financial damages.

Covering Software Risks with Professional Liability Insurance

As Moss pointed out in his Black Hat speech, software liability won't be something developers and IT professionals can escape by having a strongly worded licensing agreement. You should be proactive about preventing software liability problems via:

  • Testing.
  • Updating.
  • Regular maintenance.

It also helps to have the financial protection offered by IT business insurance.

Professional Liability Insurance can cover lawsuits if clients or third parties sue you over a problem with your software and other IT. If a cloud outage, software bug, security flaw, or other issue crops up and your clients sue, Professional Liability Insurance may cover the cost of the lawsuit.

To learn more about IT risk management, be sure to check out our business resource center Cutting Risk on the Cutting Edge.

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