Cutting Risk on the Cutting Edge:
The Technology X Factor: Client Communication

Communicating well with clients not only helps you be a successful IT company, but it also limits your risk of lawsuits.

You've probably read blogs and listened to a lot of industry experts talk about IT project risk management, but one of the most overlooked aspects of risk management is improving communication and preventing miscommunications before they occur.

IT is different than other industries. So much of your risk hinges on how well your clients understand the technology you give them. Because of that, one pillar of IT risk management is improving the way you communicate with clients. With that in mind, we'll go over five ways IT consultants and tech contractors can reduce their risks by improving their client communications.

IT Risk Management: 5 Ways IT Business Owners Can Communicate Better with Clients

Take a minute to imagine things from a client's perspective. The client often knows very little about how information technology works, and though they invest good money in IT, clients often don't understand what they can do to protect their data security.

There's a "muggle" knowledge gap, to use a Harry Potter reference. IT seems like magic to a person who doesn't know how it all works.

Unfortunately, when your clients don't understand IT (and how to use it securely), their mistakes could lead to a data breach and a lawsuit filed against your tech firm. This risk is your "third-party cyber liability," which means that you're responsible for protecting a client's data and that you can be held legally responsible (aka sued) for causing or failing to prevent their data breaches.

But beyond data breaches, client misunderstandings can lead to complaints about your work and all sorts of professional lawsuits. To prevent miscommunications, consider adopting these five techniques:

  1. Use contracts and detailed invoices. Clearly documenting what your services include, how much they cost, and when you plan to deliver them helps you avoid miscommunication. A detailed cost estimate or invoice also gives you a document to fall back on if your client has a dispute about what you promised. (For more on how IT professionals can use contracts, see "Essential Contracts for IT Businesses.")

2.Teach your clients basic data security. Many clients won't know the difference between a data breach and identity theft. Teach them about their data risks and how important it is to keep private data behind their firewall and follow secure data procedures.

3.Emphasize a client's role in their network security. IT consultants should remember that client mistakes and lax security can lead to data breach — and a lawsuit filed against you. Because clients are the ones using their software, you need to teach them to use it securely. Emphasize the importance of following basic data risk management, having strong passwords, following IT procedures, updating software, and consulting you (their IT consultant) with questions about network security.

4.Make sure clients understand what their insurance won't cover. Some business owners have the mistaken impression that General Liability Insurance covers data breaches. It doesn't. Your clients need Cyber Liability Insurance (also called Cyber Risk Insurance or Data Breach Insurance), which can cover their data breach expenses. (In some cases, however, Cyber Liability can be written as an endorsement to a General Liability policy.)

5.Institute dispute resolution procedures. If clients have complaints, it can be helpful to have standard response procedures in place. This is especially important if you have employees or hire subcontractors. Make sure everyone is on the same page and follows appropriate steps to handle customer complaints. Part of your procedures should be to document the complaint and get the client to sign off on the fix.

Is there insurance to protect you against client miscommunication? Yes, Errors and Omissions Insurance covers your professional liabilities. If clients sue because they are dissatisfied with your work and think you haven't delivered what you promised, E&O covers your legal expenses.

For free quotes on E & O Insurance and other technology insurance policies, submit an online insurance application.

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