4. No Chain of Command
Liability: Costly litigation often arises as the result of everyone in your company thinking someone else is handling the problem. A primary cause of such problems is keeping your lawyer out of the loop. Lawyers are valuable troubleshooters, but they cannot help if you do not let them know what you plan on doing. Given the speed at which problems multiply online, it is always advisable to get everything approved by a lawyer before making changing the way you do business on the internet.
An additional cause of problems is failure to coordinate internally. Failure of key personnel to coordinate with one another, or to even know to whom they should report an issue, can lead to numerous types of liability. Nowhere is this more of a concern than business activities on the internet. Not only may your company be liable for the inevitable results of these failures, but officers and directors may also be held personally liable if they know about an internet related liability, and fail to take appropriate action.
Solution: Every company doing business on the internet must develop a coordinated chain of command. Written reporting procedures and protocols for addressing IT issues on a timely basis are imperative. Designating a Chief Information Officer (“CIO”) to coordinate directly with the Board of Directors can reduce critical delays and failures associated with internet and other information technology issues. If you do not already have chain of command reporting policies in place, do it today. If you wait until a problem arises, you could find yourself out of a job and/or on the wrong end of a lawsuit.