Coronavirus: how to manage the risks facing freelancers and small businesses working from home

Coronavirus: how to manage the risks of working from home

With over 4m people working from home as a result of the Coronavirus pandemic, the risks facing freelancers and small businesses has changed. Find out what the new risks are and how to protect against them.

Client confidentiality

One of the biggest risks facing contractors, freelancers and small businesses who are working from home is keeping client data secure. In the post-GDPR world, data breaches can result in eye wateringly high fines. Examples of areas of risk include:

  • Using personal email addresses for correspondence – which could be compromised
  • Forwarding client data off-network – which could be saved on a compromised or insecure device
  • ‘Zoom bombing’ – where client audio/video calls are accessed by an unauthorised party

These errors could cause a dispute with clients or lead to a professional indemnity insurance claim.

How to manage the risks

  • Avoid saving client data on personal devices – always use the client’s network or their preferred cloud provider
  • Keep device software updated at all times – this will help minimise the chances of a vulnerability being exploited
  • Take extra care when using new ways to communicate – make sure you use a trusted provider
  • The ICO website provides useful guidance for small businesses on how to handle data securely

Turning things round quickly

The Coronavirus situation is evolving rapidly and businesses of all sizes have had to adapt quickly. This has led to clients expecting freelancers and contractors to be ultra-responsive and turn things round in as quicker time as possible. It’s easy to make mistakes like:

  • Emailing confidential files to an incorrect recipient in a hurry – leading a data breach
  • Make a typo in a piece of design work then sending it to print – leading to a costly reprint
  • Not obtaining client approval before proceeding to the next stage – leading to project delays
  • Not following a standard change request process

These errors could lead to a dispute with client.

How to manage the risks

  • Be proactive with email and data security
  • Always ensure you have evidence of client sign off (e.g. an email)

Contract disputes

Contracts between freelancers/contractors and end clients are being interrupted, changed or disrupted due to Coronavirus, and when expectations change, the likelihood of a dispute or claim increases.

Whilst the contractor may have done nothing wrong, if the client is unhappy with the work, they may take legal action. There is a cost just to defend the allegation – which professional indemnity insurance covers.

How to manage the risks

  • If the scope of work changes, have a process for change requests and how they affect the pricing of work
  • At the first sign of trouble, tell your insurer – they can help mitigate or avoid it becoming a legal dispute, and may offer a legal helpline service which can assist (Markel Direct policyholders enjoy access to a 24/7 legal helpline provided by Markel Law)

Data security and cyber crime

There has been a spike in the number of phishing and invoice fraud emails since the pandemic started – and they are becoming more sophisticated.

There are two key risks here, both of which relate to client money:

  • It’s an opportunistic time for cyber criminals to target those who handle client money (e.g. a freelance bookkeeper). By sending phishing emails, the freelance bookkeeper may accidentally click a link and make payment to a fraudster. This could result in a professional negligence claim being brought against the freelance bookkeeper.
  • Contractors, freelancers and small businesses that use an invoicing platform may have their account compromised (e.g. by a hacker purchasing their compromised login details from the dark web). The hacker could change the bank details held on the accounting software and send out invoices from the account. The client would suffer a loss in paying these false invoices and may pursue you under this cyber liability alleging that insufficient security was in place for your invoicing account

How to manage the risks

  • Consider having professional indemnity insurance and cyber liability insurance in place to protect against such scenarios
  • Always enable two-factor authentication and other security features on invoicing accounts

Cancelling cover

Freelancers and small businesses have been particularly hard hit by the Coronavirus pandemic, with many seeing projects or contracts delayed or stopped entirely. It can be tempting to cancel business insurance to save money until work picks up, but doing this is not risk free.

Professional indemnity insurance is underwritten on a ‘claims made’ basis, which means the policy needs to be live when the claim is brought against you (i.e. when you receive the solicitor’s letter) as well as when you undertook the work (i.e. when the mistake itself was made). As such, if a freelancer were to cancel their policy, they wouldn’t be covered for past work.

How to manage the risks

If you are facing financial difficulty, speak to your insurer – they may be able to help you. At Markel Direct we have introduced various support options for policyholders who may be experiencing financial difficulty - for more details, call us on 0800 640 6600. 

It’s also important to consider your needs over the medium term – business insurance is a key enabler of work for clients (by giving them a route to compensation if things don’t go to plan) and can help you win contracts as we emerge from the pandemic.