Modern-day companies revolve around their data. But with that data comes responsibility. Your company likely archives large amounts of information: data about customers, bank accounts, intellectual property, and more. When this information is stolen by an outside intruder, it’s known as a data breach.
Data can be exposed in several ways. It can be uploaded to other servers and systems, shared on the dark web, or used for identity theft.
Today, there are entire companies dedicated to hacking into organisations and breaching their data. They reside in other countries and are generally untouchable; they can continually attempt to crack into businesses because there are no repercussions for them.
This has led to some highly publicised data breach events. In May 2019, Canva reported a security event, which impacted an incredible 139 million users.
This morning we’ve been alerted to a security incident that enabled access to a number of usernames and email addresses. As soon as this happened, we remedied the issue and alerted the authorities. To be overly cautious, we’d recommend changing your password.— Canva (@canva) May 25, 2019
Usernames and email addresses were breached. The Australian consumer-facing digital design store subsequently urged it’s clients to change their passwords to protect themselves.
And it’s not just businesses that are at risk. In December of 2018, a Victorian government employee directory was reportedly accessed, revealing the information of 30,000 employees. This data breach leaked emails, job titles, and work phone numbers — all information that could be used for phishing attempts and social engineering.
But what do these types of data breach mean for a business?
Major Implications of a Data Breach
Data from 2019 Cost of a Data Breach Report by IBM Security and Ponemon Institute.
Many businesses aren’t concerned about data breaches until they happen. It’s something that they might think about occasionally, but not something that they feel they need to protect against.
A major data breach can happen overnight, leaving a company struggling to recover. What happens then?
A lot of expenses. Here are just some of the expenses that are usually attached to a data breach attack:
- Fines and penalties. If your security isn’t up to the standards required within your industry, you could be facing serious legal issues. Government agencies are cracking down on the fines and penalties issued to companies that are negligent with their security measures. Some industries, such as legal fields and medical, have additional security requirements.
- Ransom. Ransomware will lock down your system and your data until you pay the (generally untraceable) ransom. If you don’t pay the ransom, you can’t access your data. Your only option may be a full restore from backup. Without data, you may be unable to operate your business. Small businesses are more frequently targeted as they are typically less cyber security aware, do not have the same level of protection that a large enterprise may operate (although these large enterprises are themselves still not immune) and have a heavy reliance on immediate access to their data. The ransom amount can range from tens of thousands up to millions of dollars.
- Investigation costs. When a data breach occurs, you need to investigate what happened and how to prevent it from happening again. These investigation costs can be considerable as it requires complex levels of digital forensics. The more complex your network is, the more expensive this will be.
- Insurance issues. Your cybersecurity insurance should pay out in the event of a data breach or data attack. If you don’t have cybersecurity insurance, you may need to pay out for these costs upfront. If you do, your insurance premiums may increase.
- Recovery costs. You will need to recover your data and fix your technology, which requires a significant amount of labour and additional expenses. Your recovery costs will vary depending on the depth of the breach.
- Lawsuits. Customers, vendors, and even employees may sue your company for having their data breached. This is especially true if your company was negligent in handling their data, but even if you are not ultimately responsible, you will still have legal fees associated with defending your case.
- Revenue loss. Your primary revenue loss will be due to downtime when work and resources are affected. If you rely significantly upon your systems for things like transactions, you may have a significant opportunity cost. Ultimately, a data breach is more than just data theft; it’s about the costs that are associated with it. The average cost of a data breach in Australia is $2.13 million, for an average of 19,800 data records.
- Brand damage. Negative press about data breaches can lead to losing existing clients and difficulty in securing new business. It may require investment in marketing and advertising capital to recover and strengthen your brand. In the meantime, it’s difficult to continue building momentum when you’ve lost potential business. Rebuilding trust will take time, both among clients and key stakeholders.
Grow Your Business Securely
The cost of a data breach is significant, but you can protect your business through proactive security management.
By regularly auditing your security solutions and upgrading to newer solutions, you can grow your business securely and avoid the worst scenarios surrounding data breach attacks. Even if a data breach does occur, having better technology and business processes will help to reduce the costs.
Not only do you need thorough cybersecurity training for your employees and your IT personnel, but you also need next-generation cybersecurity solutions. Modern cybersecurity solutions can leverage artificial intelligence and machine learning to identify potential data breach attacks.
Cyber-attackers are now using highly sophisticated solutions which are being constantly refined. All businesses need to be able to turn their technology against them.
When you have your data stolen, there’s nothing you can do to “get it back.” While you may still have data on your side, the data is already out. It can be replicated thousands of times and spread far and wide. Your customers, employees, vendors and key stakeholders may have their data exposed and have no control over their personal damage.
To avoid the situation entirely, businesses need to have cybersecurity procedures and processes in place. Discover how Lanrex can help you grow your business securely.