As someone who provides personal risk management solutions and advice to families with significant insurable wealth, I am often surprised at how challenging it can be to get clients to truly engage in a discussion on managing the risks associated with identity theft. I remind all consumers that developing a plan to effectively manage the risks of a stolen identity is a critical part of any personal risk management program.
Where to start? First, a few words of caution on where not to start. Beware of the large number of organizations offering to sell “identify theft protection services” to individual consumers. Discerning between the good (a few) and the not-so-good (many) of these offers is no small task. Rather than using the Web to purchase a solution based on a few minutes of research, start instead with the two very basic questions that need to be asked and answered: What are the real consequences associated with a stolen identity? What can be done to manage the risks?
What are the real consequences? Much more than expense, think time and aggravation.
There are numerous safeguards in place to protect individual consumers from having to assume the full responsibility of the costs associated with most forms of identity theft. Ask any identity theft victim, and you will quickly learn that the greatest challenge is finding the time and expertise required to restore an identity that has been compromised. The Privacy Rights Clearinghouse estimates that the average victim spends the equivalent of 22 workdays trying to correct damage from this crime. There is no measurement for the amount of aggravation.
How to manage the risks? Minimize the exposure, and transfer the consequences.
As with managing any risk, there are precautions that can and should be taken to minimize our exposure from those who would steal our identity. While learning the precautions is not difficult, practicing them consistently can be daunting. A good place to start is the government website OnGuardOnline, which provides a wide range of tips from the government and the technology industry on how to better protect your personal information and minimize the chances of having your identity stolen.
Another risk management strategy is to transfer the responsibility to repair a stolen identity to a third party. Providers of identity theft services offer two very different approaches, with two very similar descriptions: resolution and restoration. While resolution services provide guidance and hand-holding, consumer advocates warn that victims are often required to perform much of the actual work on their own, and observe that many of the “services” provided are available to the general public for free. Alternatively, those organizations providing restoration services perform the actual work of restoring a stolen, and cut through the many entanglements necessary to resolve all areas of identity theft, including financial, medical, social security, driver’s license, and character and criminal issues.
Tim O’Brien is director of private client services at Cook, Hall & Hyde, a leading regional provider of commercial insurance, personal insurance, employee benefits, and risk management services with offices in New York and New Jersey. He shares 25 years of experience in the insurance industry on his blog, Private Risk Advisor, which covers how to integrate property and liability planning with wealth management.