October 31, 2019

Data Breaches in Hospitals are on the Rise – How Health Care Organizations Can Prevent Cybersecurity Attacks

The health care industry is one of the biggest targets for cybersecurity attacks. In 2018 alone, nearly 300 data breaches affected 11.5 million patients, according to a Bitglass report. Cybercriminals see health care organizations as the perfect victim due to the amount of personal health data hospitals and large health care organizations manage.

Hospitals and health care organizations are required to report breaches affecting 500 or more individuals to federal authorities and within 60 days of the breach. The negative press alone, not to mention the financial impact, could be damaging to an organization that suffers a data breach. So, and where do these threats come from and how can these type of incidents be avoided?

Where Do Cybersecurity Threats Come From?

Cybercriminals have many methods for penetrating a network, but a common strategy they use in the health care industry is phishing emails. It’s important to not only be able to identify incoming threats, but also know what happens next if an unauthorized party does access a network.

Phishing Emails

Phishing attacks are a leading cause of breaches in the health care industry, and something that can be avoided internally. Phishing emails come in a variety of types, but all have the same motive of fooling the recipient into taking an action so the cybercriminal can gain access to the organization’s network or obtain sensitive info. Through phishing, cybercriminals gain access to the network through a legitimate-looking email opened by an employee, who then might innocently open an attachment or provide key information such as a username, password or account number. Educating staff on how to identify and react to a phishing email is vital in ensuring cybercriminals are prevented from entering the network.

Ransomware

Once a cybercriminal enters the network, ransomware can be deployed locking the facility’s information systems, demanding a ransom be paid to unlock it. Patient and other records may or may not be stolen during these attacks. Whether or not an entity is able to remediate the breach without paying the ransom, dealing with these attacks is costly. In addition to the frustrations and costs incurred by a typical business, ransomware deployment in a medical facility may disrupt patient care, possibly with life-threatening implications.

Protecting Against Data Breaches

Aside from outdated software and systems, one of the biggest threats to a health care organization’s security is its own employees. Because of this, it’s critical that employees are regularly trained on their role in maintaining security and how to recognize and process illegitimate emails.

To protect yourself and your organization from this industry epidemic, there are actions you must take:

  • Reevaluate security policies and procedures to mitigate data breaches,
  • Review, test, evaluate and modify any incident response and data breach plans, and
  • Conduct regular training and education for employees.

The cybersecurity advisors at Anders can help you implement the best cybersecurity practices to protect you and your organization. Learn more about Anders Technology Services or contact an Anders advisor to see how we can help you mitigate security risk and defend against a costly cyberattack.

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October 29, 2019

You May Be Able to Claim the 45L Tax Credit Retroactively Thanks to the New Home Energy Efficiency Act

The House signed the bill earlier this week and now the Senate has approved for the 45L tax credits to be allowable retroactively for projects placed in service from 1/1/2018 – 12/31/2020.  While this bill does not include fixes to the Tax Cuts and Jobs Act, it does include an extension to 45L. Taxpayers can now amend their 2018 tax return and apply the $2,000 45L credits to their 2018 tax year.

Background on 45L

The 45L Tax Credit is an energy-efficient tax credit for residential properties. The tax credit is $2,000 per unit to the developers of energy-efficient buildings. Qualifying properties include:

  • Apartments
  • Condos
  • Townhouses
  • Single-family Homes

All eligible properties must be three stories or lower and have to incorporate energy-efficient features such as roofing, windows, doors or HVAC systems.

New Legislation on 45L

The 45L Tax Credit has been extended many times over the years until it expired at the end of 2017. The Tax Extenders reinstate the credit and incentivize multifamily developers and homebuilders to invest in energy-efficient materials. The bill is retroactive, so tax returns can be amended in 2018 to take the credit.

The Anders Real Estate and Construction Group can help determine if your construction project would qualify for 45L or other tax credits and incentives. Contact an Anders advisor to learn more.

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October 24, 2019

Making Technology Work for You: 5 Tips for Proactive Digital Estate Planning

While the current estate tax exemption is higher than most people will qualify for at $11.4 million, estate planning is an important process for everyone. Critical decisions such as who will be the legal guardian of your children, how your assets should be distributed, and figuring out powers of attorney and medical directives should be proactively decided to put you and your loved ones at ease. Technology is becoming more important than ever, changing the way we access our personal information, making some aspects of estate planning more challenging, but easier in other ways.

How Technology is Impacting Estate Planning

After someone passes away, the executor’s job can sometimes be like detective work. A tax return can provide a road map for some assets that generate interest and dividend income, but doesn’t show the full picture. In the past, executors could wait for monthly bank statements or other documents in the mail to help piece together the estate assets. As more people go paperless and digital assets like bitcoin become popular, an executor’s job can become even more difficult because the paper trail is reduced. To better prepare your estate for your loved ones, below we discuss options to handle and protect your estate planning information in the digital age.

1. Keep a list of all assets that you own, including the location of bank accounts, investments and cryptocurrency. Review the list annually to update any changes. Include accounts that may not be generating income currently, like a retirement plan from a former employer or life insurance policies. If an executor doesn’t know assets exist, the assets may ultimately go to unclaimed property in your state.

2. Make sure someone you trust knows, or can locate, the password to your cell phone. Your cell phone is a wealth of information with contacts for advisors like your CPA, attorney, investment advisor and insurance advisor. You probably also have email access which allows an executor to get information about monthly statement notifications that may be sent to email. Obviously, choose this person wisely.

3. Look into a password app like LastPass that can keep track of your current passwords so an executor could access your accounts.

4. Designate a person to access your accounts if possible. Gmail has a feature called Inactive Account Manager which will send an email to an address you specify if there is no activity on your account for a period of time. If someone can access your email, they are in a much better position to get access to various accounts and figure out usernames and passwords if necessary.

5. Don’t forget about the priceless assets you have as well. Pictures on social media, blogs and other digital accounts can be very valuable to loved ones but only if they’re able to find and access those after you have passed away. Facebook has a feature called Memorialization Settings which allows you to set up a legacy contact regarding who can access your account.

Legally, the treatment of digital assets is still evolving as technology evolves. Many states have passed Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) or similar laws which cover how an executor or heir can access information. The laws in the US are more stringent than many other countries. Social media and certain apps also have their own terms and conditions which dictate what happens when an account owner dies and who has access to the information.

Being proactive and taking care of some of this basic estate planning creates a roadmap for your executor to follow. It allows the estate to be administered and distributed in a quicker and cost-efficient manner because less time and professional help is needed to gather information about the estate assets. Your executor and heirs will appreciate you even more for being proactive. Contact an Anders advisor with questions about your estate plan, or learn more about Anders Family Wealth and Estate Planning Services.

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October 23, 2019

Dealing with Occupational Burnout in Your Career

Occupational burnout is one of the top reasons cited for employees leaving a position or organization. One of the causes of employee turnover is occupational burnout which is defined as a physical or mental collapse caused by work overload or stress due to factors in one’s occupation. A common misconception is that occupational burnout occurs only because of long hours or a high volume of work. While these are both potential factors, they are not the only causes of burnout. It’s important for employees to know what burnout feels like, how to avoid it, or how to overcome it if they are already feeling burnt out.

What causes burnout?

Below are some of the most common causes of burnout in the workplace:

  1. Lack of control in your position
  2. Insufficient rewards/recognition
  3. Lack of community in or outside of the workplace
  4. Absence of fairness in the workplace
  5. Conflict of values between the employer and the organization
  6. Work overload
  7. Negative culture in the workplace/organization
  8. Poor management/leadership
  9. Lack of job security

How does burnout manifest?

Burnout can look or feel different depending on the person and the issue that is causing it. Some common effects are:

  1. Lack of enthusiasm
  2. Making mistakes or missing details
  3. Losing focus
  4. Feeling irritable with coworkers or bosses
  5. Feeling constant stress/anxiety about work
  6. Angry outbursts at work or at home

How can one avoid burnout?

There are different ways to avoid heading down the path towards burnout. Depending on your personality and needs, one or several of these options may help:

  1. Measure your wins by effort, not outcome
  2. Integrate more passion, less responsibility- if you’re adding activities to your schedule, try to make them activities that bring you happiness
  3. Take care of your body- exercise, eat healthy and drink plenty of water
  4. Try to set strict times for bed so that you are receiving 7+ hours of sleep every night
  5. Work on your positive inner monologue- be kind and encouraging to yourself
  6. If possible, try changing your work schedule to be more flexible to your needs- like coming in at 10:00am instead of 8:00am

How does one overcome burnout when it has already happened?

Again, this will depend on the issue occurring and the personality and needs of the employee. Here are some ways to overcome occupational burnout:

  1. Ask your employer for more responsibility or new education to expand your skills
  2. Request a raise if possible, or find intrinsic motivation if you cannot change your salary
  3. Take steps to connect with your colleagues or surround yourself with a positive group of peers
  4. Bring up the issues to your employer and suggest alternative strategies
  5. If there is a conflict between the employee and employers’ values- either try to align your values with the organization’s or leave the organization
  6. Avoid chronic overwork- build in non-negotiable time for recovery following particularly stressful times that can’t be avoided
  7. Take time off and actually turn work off while you’re out of the office- don’t respond to emails or phone calls until you are back to your workplace

Many employees will experience occupational burnout at some point in their careers. It is vital to know the signs of burnout and how to avoid it for both employees and employers. Human Resources and management should be watching out for their employees’ well-being so that burnout does not cause the loss of good talent. Employees have to take their work satisfaction seriously to dodge falling into the trap of occupational burnout. Satisfied employees make for a successful organization.

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October 22, 2019

Cybersecurity for Startups: A 5 Step Plan for Preventing Costly Data Breaches

All startups have one thing in common when it comes to cybersecurity: they all are at some level of risk of a costly data breach. Startup business owners may not even be aware of certain vulnerabilities including ransomware, phishing, data loss or intercepted payments from clients – all potentially fatal incidents for a startup. Below we dive into five ways entrepreneurs can protect their business from cyberattacks.

Step #1: Evaluate Risk

The first step of consideration in defining a cybersecurity program is asking if risk has been evaluated. If so, how is risk addressed in the company? Having a plan around lowering cybersecurity risk can help protect startups from cyberattacks and create action items in an event of a breach. Anders Technology Services has experienced advisors to help startups identify, protect, detect, respond and recover from cybersecurity risks.

Step #2: Implement Security Practices

After assessing risk, it’s important to implement security best practices that are personalized for the business landscape. Ask the following questions to discover areas to address:

  • Are we connected to the internet both internally and externally?
  • Do we have webcams?
  • Do we have servers?
  • Do we have laptops?
  • What information could potentially be exposed?
  • Externally, mainly focusing on software as a service (SaaS), how do the software agreements address security?
  • Do we send information to other businesses? If yes, what are their security practices for protecting the information we share?

Using reputable SaaS systems can offload some of the security burden as part of a cybersecurity strategy. Some even offer discounts to startups, such as Microsoft, who gives startups $200 plus 12 months of free services to get started and test the latest products.

Step #3: Know Who to Call

If a breach or cybersecurity incident occurs, have an IT provider on deck to reach out to immediately. A quick response is vital to mitigating impact on the business. Develop a relationship and level of trust with an IT company that has a focus in cybersecurity. Calling an IT firm for the first time when an event occurs only adds unnecessary time wrapped up in information gathering.

Step #4: Develop a Recovery Plan

How will the critical functions of the business continue to operate if a cybersecurity incident restricts production or productivity? Developing a disaster recovery plan will help determine what workarounds are available and how long the business can survive without production components in place.

Step #5: Learn from Other Startups

Look into what others in the startup community are doing about cybersecurity. Have they experienced an incident? What do they do to prevent incidents in the future? Being part of a startup organization or an incubator may help with information sharing to globally reduce risks among startups.

Cybersecurity is not just a best practice for large, enterprise companies, startup businesses are direct targets as they often have more risk and vulnerabilities and less resources to protect themselves. Anders Technology Services works with startups on identifying risk and developing a personalized cybersecurity plan. For more about the cybersecurity resources available to startups and how to protect your business, contact an Anders advisor.

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October 21, 2019

Understanding Revocable, Irrevocable and Charitable Trusts

Estate planning is often an overlooked aspect of financial wellness, but it is one of the most important components. Due to the complexity of the topic, many people do not have a current estate plan to fit their financial planning needs. Having a trust is a vital part of any good estate plan, and below we dive into what a trust is and the different types.

What is a Trust?

Trusts are created with many different terms and to serve various purposes. In general, trusts are created to carry-on a person’s wishes during their lifetime or upon their death, dependent upon the terms of the trust. By using a trust, an organized process is created to manage and distribute assets to beneficiaries. Below is a brief overview of various types of trusts that can be incorporated into an estate plan.

Revocable vs. Irrevocable Trusts

The primary difference between revocable and irrevocable trusts are the treatment of assets and trustee power.

Revocable Trust

In a revocable trust, the assets are considered personal assets and trust terms can be changed at any time by the grantor. Revocable trusts are often called living trusts, as the individual can act as the trustee of a revocable trust. These trusts are taxed on the individual’s tax return and a separate return is not required. Revocable trusts are recommended for most people, even if there will be no taxable estate at death. Upon death, these convert to irrevocable trusts, and assets held in the revocable trust will avoid probate.

Irrevocable Trust

Once assets are placed in an irrevocable trust, the property cannot be taken back, and you cannot act as trustee to manage the assets. These trusts often have high taxes due to the compressed tax brackets if income is not distributed. Assets in an irrevocable trust are held outside of an estate upon death and these assets will not go through probate. Irrevocable trusts can be set up for various reasons during life including removing assets from an estate, asset protection, charitable planning or planning for a special needs individual.

Charitable Trusts

If you are interested in charitable giving, the use of a charitable remainder trust may be the right choice for your financial plan. Assets are donated to the trust and income is distributed to beneficiaries, producing tax savings at the individual level.

Charitable remainder trusts are an example of a split-interest trust. The trust is a tax-exempt irrevocable trust. Income is distributed to individuals for a period of time; upon expiration of the defined period, the remainder of the trust is transferred to the charitable beneficiaries.

It’s important to work with a trusted advisor on developing your estate plan. The Anders Family Wealth and Estate Planning Services Group can help ensure you and your family are preparing for the future. Contact an Anders advisor to learn more.

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October 17, 2019

Downtown St. Louis Construction Update: America’s Center, Union Station Aquarium and 21c Museum Hotel

As a downtown St. Louis accounting firm, we’re very interested in the new construction that comes to St. Louis and its effect on the city. Our employees work and play downtown, and it’s exciting to see our home thrive with new business and opportunity. Below are a few interesting construction projects we’re keeping an eye on around downtown St. Louis.

America’s Center

Fresh off a contract renewal through 2028 with Capital Sports to continue the volleyball tournaments that bring 30,000 people to America’s Center each year, city leaders have presented a plan for $175 million in renovations to expand America’s Center. To remain competitive with nearby cities, the plan calls for the addition of a 65,000 square foot ballroom, 92,000 square feet of new exhibit space, and a new pavilion. The developers hope to capitalize on the revitalization of Laclede’s Landing and the Arch Grounds and breathe new life into downtown St. Louis.

Union Station Aquarium

Drive downtown and you will notice the gigantic legs of the observation wheel at the Union Station Aquarium. The wheel is expected to open in October 2019 and will include 42 climate-controlled gondolas. The two-hundred-foot attraction is sure to be a landmark for downtown St. Louis for many years to come. Inside Union Station, the formation of the 75,000 aquarium is beginning to take shape. Expecting to open in December 2019, the Aquarium welcomed its first aquatic resident this summer, a blue lobster gifted by a restaurateur from Cape Cod after the Blues won the Stanley Cup.

21c Museum Hotel

The award-winning hotel and restaurant group, 21c Museum Hotels is working to restore the old YMCA building on Locust Street in downtown St. Louis. Founded by contemporary art collectors and preservationists, the Company has worked to preserve historic buildings across the Midwest. The hotel is expected to be completed in 2020.

The Anders Construction Group stays up to date on the latest projects in our own backyard. Stay tuned for more details on upcoming St. Louis construction projects.

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October 15, 2019

Tax-Advantaged Investing with Asset Location

The allocation of assets between taxable and tax-advantaged accounts, known as asset location, is a tax minimization strategy that takes advantage of the fact that different types of investments receive different tax treatments. When reviewing asset statements, it’s not uncommon to see that the asset allocation in tax-advantaged accounts is identical to the asset allocation in taxable accounts. This is a red flag, as portfolios need to be rebalanced across different accounts.

Increase Returns without Increasing Risk with Asset Location

According to Vanguard’s Advisor’s Alpha® study, proper utilization of asset location strategies can add up to 0.75% to an investor’s average annual returns without increasing risk. Unlike some of the other value-add strategies, asset location can add value each and every year with the benefits compounding over time.

From a tax perspective, optimal portfolio construction minimizes the impact of taxes by holding tax-efficient broad-market equity investments in taxable accounts and by holding taxable bonds and tax-inefficient assets, like REITS or commodities, in tax-advantaged accounts. Taxable bond income is taxed at the federal marginal income tax rate which could be as high as 37%. The arrangement of fixed income cited above takes maximum advantage of the yield spread between taxable and municipal bonds – this generates a higher and more certain return premium.

Tax-Efficient Broad-Market Equity Investments

Tax-efficient broad-market equity investments are preferred over actively managed mutual funds, ETFs or individual stocks because actively managed equity investments consistently produce much higher levels of capital gain distributions than their passive, broad market counterparts. As these distributions are taxed at 15% or 20% depending on income, fewer and smaller distributions benefit investors. There is also a significantly lower fee level of passive strategies vs. actively managed strategies.

A very important rule for investors to remember is that their investment returns should be viewed as what they keep after taxes and expenses. At the end of the day, this is what the investor gets to spend. After all, a good return is not worth much if one gives it back in the form of taxes and expenses.

For more information on tax-advantaged investing practices contact our affiliate company, Claris Advisors.

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October 8, 2019

How to Give and Get Back with Tax-Advantaged Charitable Giving Following Tax Reform

Many more taxpayers are now taking the standard deduction as a result of the Tax Cuts and Jobs Act. The increase in standard deduction coupled with changes to certain itemized deductions reduces the ability of taxpayers to itemize deductions. As a result, a little more planning is needed to maximize the tax benefit from charitable donations.

For 2019, the standard deductions are:

Charitable Deductions 2019

Under the new rules, state and local tax deductions are limited to $10,000 and miscellaneous itemized deductions have been eliminated. Many taxpayers are not eligible to take medical deductions because of the high threshold. Therefore, the determination of whether or not to itemize often comes down to the total of mortgage interest and charity.

Tax Requirements for Charitable Giving

Charitable giving can be an effective measure to help offset future tax liabilities. Basic tax rules for benefitting from charitable contributions include:

1. Taxpayers must itemize their deductions to receive a federal benefit as there is no above-the-line deduction for taxpayers who use the standard deduction. See standard deduction chart above.

2. Contributions must be given to an IRS approved charity such as a 501(c)(3) organization.

3. Contributions are capped based on adjusted gross income (AGI) thresholds:

  • Cash contributions to a public charity are limited to 60% of AGI
  • Noncash contributions are limited to 50% of AGI
  • Donations of appreciated property, such as stock, are limited to 30% of AGI

Any excess contributions unused in the current year due to these thresholds are carried forward for five years. Different limits apply for gifts to private foundations, as discussed later.

4. A taxpayer must be able to substantiate all charitable contributions through documentation or written acknowledgment letters from the charitable organizations.

5 Post-Tax Reform Charitable Giving Tips

Year-end planning around charitable giving can help determine how to get the biggest benefit based on your specific tax and cash flow situation. With tax reform changes and the increase in the standard deduction, it may make sense for some taxpayers to accelerate charitable contributions into one tax year rather than spreading contributions across multiple years. This could ensure they will itemize deductions to receive a benefit for the contributions made. Listed below are some of the more common types of charitable planning opportunities.

1. Donations of Appreciated Property or Stock

Donations of appreciated property or stock held for more than one year are deductible at the fair market value on the date of contribution. Any capital gain associated with the property is not recognized. Appreciated gifts of securities do not have to be appraised, however, donations of other property such as artwork or land may require an appraisal if the value is expected to be over $5,000.

2. Qualified Charitable Distributions (QCD)

An IRA owner who is at least age 70 ½ is eligible to make a QCD of up to $100,000 annually from their traditional IRA. This distribution is not taxed and counts toward the annual required minimum distribution (RMD). Since the distribution is for the benefit of a charity, the distribution is not added to income effectively reducing a taxpayer’s AGI for the year. There is no double dipping allowed so the QCD cannot be taken as a charitable deduction since the amount was never included in income. There are two key requirements for a QCD:

A. The distribution must be made via a direct transfer from the retirement account to the charity.

B. Only public charities can receive a QCD. A donor-advised fund or private foundation are not eligible recipients.

3. Donor-Advised Funds (DAF)

A DAF is a fund set up through a public charity, most often a special account at an investment company. The donor can advise, but cannot dictate how to distribute the funds in the account. A taxpayer contributes cash or property to the fund which allows them an immediate tax deduction even if the funds in the account have not yet been disbursed. Combine this strategy with #1 to get the biggest benefit.

4. Charitable State Tax Credits

Certain charitable organizations may have an additional benefit in the form of state tax credits. A state can allot a certain amount of tax credits to a charity to pass along to donors based on the level of donation given. These credits are generally valued at 50% of the contribution given and are a dollar for dollar reduction in tax liability on the state return. Each organization will have different threshold requirements as to what level of donation is eligible to receive these tax credits.An application will need to be completed for the credits and an issued certificate will be required when filing the state tax return to substantiate the credit taken. For any state tax credits received in which a benefit of greater than 15% is recognized, the charitable deduction on the federal and state return must be reduced by the tax credit received.

5. Private Foundations

High net worth individuals who want to control charitable activities can set up a private foundation, which is essentially the taxpayer’s own 501(c)(3) organization. Contributions to nonoperating private foundations are limited. Cash donations are generally capped at 30% AGI rather than 60%, and appreciated property is capped at 20% rather than 30%. Keep in mind private foundations have additional annual filing requirements with the IRS, strict administrative rules and initial set up costs.

Spending a little time coordinating your charitable giving can have a significant impact on your tax savings. In some cases, you can combine some of these giving strategies to get even more benefit.

To learn more about these giving strategies or more advanced planning, contact an Anders advisor.

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October 1, 2019

Trick or Treat: Cybersecurity Awareness Month Brings Light to Cyberattacks

October typically brings Halloween ghost stories, pranks and trick or treating, but scary stories about cyberattacks and trickery around data breaches run rampant all year long. Aside from Halloween, October is also National Cybersecurity Awareness Month (NCSAM), bringing awareness to the latest cybersecurity headlines, security breaches and personal privacy concerns. During October, Homeland Security works to raise awareness about the importance of cybersecurity and provides resources to help us be safer and more secure online.

Own IT. Secure IT. Protect IT.

The NCSAM 2019 theme is Own IT. Secure IT. Protect IT. This theme emphasizes personal accountability and stresses the importance of taking proactive steps to enhance cybersecurity practices at home and in our businesses.

Own IT emphasizes that every person plays an important role in protecting our personal and work privacy information while traveling or online. Many times, we provide a lot of personal information on social media that could compromise our privacy.

Secure IT stresses the importance of securing our accounts, appliances and Wi-Fi with strong passwords and multifactor authentication and being diligent while working within email.

Protect IT helps us become aware of new cybersecurity trickery that can be used on social media and internet devices. We need to be aware IT users and take the necessary steps to protect our data.

NCSAM in Your Business

How can your company celebrate National Cybersecurity Awareness Month? Below are a few ideas:

  • Host a cybersecurity lunch and learn for your employees
  • Setup an awareness training program
  • Schedule a penetration test to help expose vulnerabilities to protect your data
  • Implement mobile device management or multifactor authentication
  • Increase your cloud security services

Whatever you choose, the cybersecurity advisors at Anders can help you implement the best cybersecurity practices to protect you and your business. Learn more about Anders Technology Services or contact an Anders advisor to see how we can help you mitigate security risk and defend against a costly cyberattack.

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