Protecting Your MSP from the Cybercrime Epidemic

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Cybercrime is on the rise, and MSP cybersecurity is more critical than ever. Managed Service Providers (MSPs) are increasingly in the crosshairs of ransomware groups, phishing schemes, and other criminal actors.

As the frontline defenders of your clients’ IT systems, MSPs face unique challenges in navigating the legal and operational risks associated with cybercrime.

It gets even worse because most MSPs don’t realize that they are in the security business whether they want to be or not. It means clients will demand cybersecurity expertise.

Yet many MSPs don’t realize that the right contracts can play a critical role in mitigating cybersecurity threats MSPs face daily.

In this blog, we’ll explore how cybercrime impacts MSPs and the key contractual provisions you need to protect your business.

The Growing Threat of Cybercrime

Protecting Your MSP from the Cybercrime Epidemic #1A crucial industry shift is underway. While cybersecurity has dominated MSP concerns for the past decade, the industry is now entering an AI phase.

However, the lessons learned about data breach prevention for MSPs during the cybersecurity era remain critical. In many ways, they’re even more important as attack surfaces expand.

1. Ransomware

Ransomware attacks can cripple businesses by encrypting their data and demanding payments for its release. This kind of situation forces the industry to reevaluate how MSPs structure their vendor relationships and client contracts.

Impact on MSPs:

  • Criminals may target MSPs as a gateway to compromise multiple clients.
  • Clients may hold MSPs accountable for failing to prevent an attack.

2. Phishing and Social Engineering

Sophisticated phishing schemes trick users into providing access to sensitive systems or information. These attacks have evolved beyond simple email scams.

Recent cases have shown criminals intercepting and rerouting legitimate business communications, including manipulating call forwarding systems to approve fraudulent wire transfers.

Impact on MSPs:

  • Breaches caused by client employees may still lead to disputes about your MSP’s role in securing systems.
  • Legal liabilities may arise if a breach impacts compliance with data privacy laws like GDPR or HIPAA.

3. Supply Chain Attacks

Hackers target vulnerabilities in third-party vendors or tools to infiltrate MSP networks. There are many instances where you can see how sophisticated attackers can compromise legitimate software installers to create distribution channels for malicious code.

Impact on MSPs:

  • You could be blamed for breaches caused by vendors you rely on.
  • Regulatory fines or lawsuits may follow if sensitive data is compromised.

How Contracts Can Protect Your MSP

Protecting Your MSP from the Cybercrime Epidemic #2

There are critical weaknesses in traditional MSP agreements. When security oversights or system failures occur, the fallout often extends beyond a single client, creating a ripple effect of liability.

Standard contracts, built around generic liability clauses, fail to address the complexity of modern risks. To stay protected, modern agreements must go beyond outdated liability language.

So, to protect your business from the fallout of cybercrime and strengthen cybercrime protection for MSPs, your contracts must address these key areas:

1. Exclude Liability for Criminal Acts

Make it clear in your agreements that your MSP is not responsible for damages caused by cybercriminals. When contracts explicitly define the boundaries of responsibility regarding criminal activities.

Example Clause:

“The MSP shall not be liable for any damages, losses, or interruptions caused by the criminal acts of third parties, including but not limited to ransomware attacks, phishing schemes, or other unauthorized access.”

2. Document Security Recommendations

Protect yourself by ensuring clients are aware of, and agree to, your security recommendations. This creates an essential chain of accountability and is also crucial for MSP cybercrime risk management when incidents occur.

Example Clause:

“The client acknowledges receipt of the MSP’s cybersecurity recommendations and assumes responsibility for implementing or rejecting such measures. The MSP shall not be liable for any damages arising from the client’s failure to implement these recommendations.”

3. Include Indemnification Clauses

Ensure clients indemnify your MSP for breaches caused by their own negligence or non-compliance with your recommendations. Strong indemnification provisions act as a critical risk transfer mechanism. As a result, MSPs gain protection from claims arising from client actions or inactions.

Example Clause:

“The client agrees to indemnify and hold harmless the MSP from any claims, damages, or liabilities resulting from the client’s actions, including failure to follow the MSP’s cybersecurity guidance.”

4. Require Cyber Insurance

Insurance requirements create an additional layer of risk mitigation. You should mandate that both your MSP and your clients carry cyber liability insurance to offset financial risks.

Example Clause:

“The client agrees to maintain a cyber liability insurance policy to cover damages resulting from cybercrime, with proof of coverage provided to the MSP upon request.”

Why Dynamic Contracts Are Essential

Cyber threats evolve rapidly, and static contracts can quickly become inadequate. Emailing Word documents back and forth with clients is inefficient. As it can also create dangerous gaps in protection.

As cybersecurity for MSPs becomes more complex, ensuring contracts remain up-to-date is essential for mitigating risks and staying compliant.

Dynamic contracts ensure your agreements:

  • Reflect emerging threats like ransomware-as-a-service.
  • Stay aligned with changing regulations and cybersecurity standards.
  • Protect your MSP from new liabilities as the threat landscape evolves.

Overall, dynamic contracts provide the flexibility and responsiveness needed to address the challenges proactively.

The Monjur Advantage

At Monjur, we help MSPs protect their businesses with contracts designed to address the unique challenges of the cybercrime era. Our Contracts-as-a-Service (CaaS) solution ensures your agreements are always up-to-date and tailored to mitigate risks like ransomware and phishing.

Don’t let cybercriminals put your MSP at risk. Contact us today to learn how Monjur can help you safeguard your business and your clients.