Hopes. Dreams. Plans.
These are the words that often dominate the start of a new year. But in 2025, a more sobering term looms for MSPs:
Reckoning.
The rules of the game have shifted, and the stakes for MSPs have never been higher. It’s not just about ransomware anymore. It’s about the mounting liabilities MSPs are unknowingly taking on. Without clear documentation of actions, transparent communication of risks, and proactive measures, MSPs are building a debt of liabilities that could lead to catastrophic lawsuits and financial devastation. Insurers are scrutinizing claims more than ever, and those without verifiable evidence of their efforts could be left holding the bag. Adapt now or face the nightmare of owning liabilities you never expected.
The Perfect Storm for Liability
The cyber threat environment has reached a tipping point. Ransomware-as-a-service gangs, like Black Basta, continue to terrorize businesses, while phishing scams and automated exploits evolve daily. Between 2022 and 2024, global attack volumes surged 7% annually, with financial damages projected to top $10 trillion in 2024.
But this isn’t just about stolen data or downtime. For MSPs, every breach highlights systemic vulnerabilities in your clients’ environments and exposes gaps in your documentation, processes, and security programs. When something goes wrong, clients and their insurers are quick to shift the blame squarely onto you.
This is where documentation comes in. Everything needs to be documented, so that when the dust settles, you have proof of what you’ve done and proof that your clients made certain choices about their cybersecurity. Does this feel like an overwhelming, time-consuming project you’d rather not deal with? Galactic gets this and that’s why we offer a very simple solution: a done for you compliance program that makes documenting a snap.
Cyber Insurance: From Safety Net to Trap
But do you really need all of this documentation? If your clients has cyber insurance, they have a safety net, right? WRONG. Insurers are scrutinizing every detail, rejecting claims for policyholders who fail to meet stringent security commitments and rejecting 40% of claims. Oh, and some insurers are pursuing litigation against MSPs, claiming their negligence directly contributed to breaches.
The message is clear: without evidence meticulous documentation proving you followed through on your commitments. You’re not just unprotected; you’re a target.
Liability: The Hidden Threat to Your MSP
When it comes to cybersecurity, documentation isn’t optional. It’s the foundation of your defense against liability. Without a consistent, verifiable process to track and prove your actions, you’re exposing your MSP to significant risks.
Failing to document properly isn’t just an oversight; it’s a liability time bomb. If your team isn’t maintaining a baseline for documenting security practices and ensuring those practices are followed consistently, you’re not only leaving your clients vulnerable but also setting yourself up for blame when something goes wrong.
Consider this: A client misinterprets your advice or skips a critical step. If they experience a breach and the insurer demands proof of your efforts, what will you have to show? Without clear documentation, you could find yourself owning liabilities that should never have been yours in the first place.
At Galactic Advisors, we specialize in helping MSPs build documentation systems that safeguard your operations, prove your efforts, and reduce liability. Don’t let poor documentation turn into a financial and legal nightmare. Take control now.
The MSP Liability Trap
In 2023, the law firm Mastagni Holstedt sued their MSP, LanTech LLC, for more than $1 million following a ransomware attack orchestrated by Black Basta. The firm alleged that LanTech’s cybersecurity measures failed, leaving backups compromised and forcing Mastagni to pay the ransom.
The critical failure? There was no written service agreement to define LanTech’s responsibilities, exposing the MSP to extensive liability.
This isn’t an outlier; it’s a preview of what’s coming. Without documented agreements and evidence of your efforts, you’re leaving your business defenseless.
How to Turn the Tables on Liability
The good news? You can protect your business while positioning yourself as an indispensable partner.
- Document Everything
- From security recommendations to risk acceptance forms, meticulous records are your shield against legal exposure. Galactic Advisors provides resources and support to help MSPs build comprehensive documentation systems, ensuring you’re always prepared.
- Launch a Cyber Liability Program
- Incorporate Galactic’s recurring third-party risk assessments into your offerings. These assessments demonstrate compliance, identify vulnerabilities, and educate clients on why security investments matter. Galactic works with you to integrate these programs seamlessly into your stack.
- Position Yourself as the Trusted Advisor
- Educate your clients about their role in cybersecurity. Galactic offers risk acceptance forms to help you formalize your clients’ decisions and stress the consequences of refusing recommendations.
- Fortify Your Insurance Coverage
- Review your tech E&O and cyber liability insurance policies annually. Work with your agent and Galactic to ensure your bases are covered.
Why Evidence Is EVERYTHING
We’ve moved way past trusting in goodwill alone, and 2025 is ramping up to be very intense for MSPs. You’re going to be required to provide verifiable proof of your efforts, recommendations, and your clients’ choices. Documentation is no longer optional. It’s your best defense against liability and your greatest tool for turning compliance into opportunity.
Not sure where to start? Well, the first step is easy: contact us. Galactic Advisors is here to help you navigate this high-stakes environment. From building airtight evidence systems to running third-party risk assessments, we equip MSPs with the strategies to stay secure and thrive.
Your clients trust you to protect their businesses. Make 2025 the year you rise to the challenge.
Contact Galactic Advisors today to learn how to bulletproof your operations and transform liability into opportunity.
