Shifting the Security Conversation from Compliance to Liability Defense
Cybersecurity providers are discovering that framing security solutions as liability protection rather than mere compliance tools significantly increases client investment motivation. According to Bruce McCully, CEO of Galactic Advisors, helping businesses understand that lawsuits can be more devastating than ransomware attacks creates a more compelling business case for comprehensive security measures.
“You’re changing the conversation,” McCully emphasized during his presentation at the XChange NexGen 2025 conference. “You’re demonstrating the risk and helping clients understand that without proper evidence of their security posture, they’re vulnerable to lawsuits that can far exceed the cost of ransomware payments.”
The Rising Tide of Cybersecurity Litigation
Recent data underscores the growing financial impact of cybersecurity incidents across organizations of all sizes. A comprehensive analysis by RSM of over 10,000 cyber claims between 2020 and 2024 revealed that small and midsize enterprises face particularly severe consequences. The study found that 98% of claims, totaling $2.4 billion, came from companies with less than $2 billion in annual revenue.
Ransomware and business email compromise represented half of all claims exceeding $1,000 for smaller enterprises. The analysis documented 395 claims over $1 million and another 341 claims between $500,000 and $1 million for this segment. Business interruption losses sometimes exceeded $90 million for companies with annual revenue below $700 million, demonstrating how cybersecurity liability has become a critical business concern.
The Legal Aftermath: Beyond the Initial Breach
McCully highlighted an emerging threat that many organizations overlook: the legal professionals who follow cybersecurity incidents. “We have a problem—it isn’t just the hackers,” he warned. “It’s a new breed of personal injury attorney that follows the hacker. After a breach, you aren’t the victim; you become the defendant.”
This legal landscape makes proper documentation essential. Manny Villa, CEO of VIA Technology, stressed that establishing processes for documenting client security posture and solution provider obligations has become fundamental to doing business. “My biggest fear as a solution provider owner is risk management,” Villa told CRN.
Building a Defensible Security Posture
Galactic Advisors recommends several key components for creating a defensible security position that addresses both technical and legal requirements:
- Written Information Security Plans: Documented strategies with evidence for auditors, insurers, and lawyers
- Acceptable Use Policies: Tracked reviews and approvals tied to insurance requirements
- Secure Documentation Portals: Systems for retrieving critical documents even when primary systems are offline
- Customized Incident Response: Plans based on proven playbooks and industry best practices
- Security Awareness Training: Assigned training with completion evidence for all employees
These measures not only improve security but also create the documentation necessary to defend against potential litigation. As industry developments continue to evolve, this comprehensive approach becomes increasingly valuable.
The Financial Case for Proactive Liability Defense
The financial data reveals why liability defense has become such a compelling sales approach. Payouts for organizations of all sizes covered only about 30% of total incident costs, leaving businesses to absorb significant financial impacts. For smaller enterprises, the five-year payout covered 69% of costs, down from 81% the previous year.
Average crisis services for smaller enterprises increased from $121,000 in 2020 to $144,000 in 2024, with the five-year total cost growing 40% year-over-year. These escalating costs make proactive investment in security measures increasingly justified from a financial perspective.
Meanwhile, related innovations in security technology continue to emerge, providing additional tools for organizations seeking to strengthen their defensive positions.
Transforming Security into Business Value
McCully emphasized that adopting comprehensive security products and processes not only reduces liability but can also generate greater monthly recurring revenue for solution providers. “You’re helping them understand the liability, and you’re giving them a solution,” he said.
This approach represents a significant shift in how security services are positioned in the market. Rather than focusing solely on preventing breaches, providers are helping clients understand how proper security measures can limit legal exposure and financial impact when incidents inevitably occur.
As organizations consider their strategic expansion and digital transformation initiatives, integrating liability defense into their security planning becomes increasingly critical. Similarly, understanding how recent technology vulnerabilities can create legal exposure helps organizations make more informed security investments.
The conversation around cybersecurity continues to evolve, with market trends showing increased awareness of both technical and legal dimensions of security incidents. For solution providers, this creates opportunities to deliver greater value while helping clients navigate an increasingly complex threat landscape.
This article aggregates information from publicly available sources. All trademarks and copyrights belong to their respective owners.
Note: Featured image is for illustrative purposes only and does not represent any specific product, service, or entity mentioned in this article.
