Data breaches are one of the biggest risks that businesses face in today’s world. Around 86% of business leaders see cyber security as their most concerning threat is data security. A benefit of hiring a market research service is its risk analysis, which will include an assessment of a business’s cyber security policies. This blog post is going to look at some of the ways that a data violation can damage a business.
Most data breaches (93%) occur within 60 seconds, and it can take business weeks to realize that a data loss has even occurred. Almost every business today will suffer some form of data infringement, so you must develop a plan of action to deal with them.
eBay has felt the sting of a major data infringement with its entire database, exposing passwords, addresses, names, and phone numbers of 233 million customers. This left all of these individuals exposed to identity theft. But that is not the worst part of the data violation. It took the company nearly three months to detect this breach, leaving customers blind to the fact that their information was compromised.
LinkedIn suffered through a similar violation, exposing millions of their users to identity theft. However, their predicament was much worse because the company did not take adequate steps to secure data.
In both of these examples, these large businesses had a flaw in their plan when guarding against data infringements. As a result, both businesses lost the trust of their customers.
How Does a Data Breach Affect Most Businesses?
Brands that fall prey to a data breach are going to experience several repercussions, including a loss of reputation that is going to cost quite a bit of money. Some fines will be paid, but brand reputation will still be the most expensive and difficult thing to recover from the loss.
Consumers have an initial gut reaction to a data violation on severity. In most cases, their initial reaction is to find a replacement to do business with. However, if the brand reacts quickly enough and provides an explanation; then those same customers might give them another chance. The way a business responds in the first week is critical to earning back the trust of consumers!
Collecting Sensitive Information Presents Unique Risks
When sensitive information is involved, there is going to be a much larger issue if a data violation occurs.
Sensitive Information Includes:
- Racial Orientation
- Religious Affiliation
- Political Alignment
- Union Membership Status
- Biometric Data that Identifies Someone
In most cases, individuals who share personal data like this are using it as a security mechanism that will identify who they are. The problem is that a person can’t simply reset their social security number when data is breached. However, since a password could just be reset, it’s not considered sensitive information.
As a result, businesses should take extra steps to secure sensitive information and only gather it when necessary. Users are less likely to forgive companies that compromise their sensitive data.
These Two Cases are Just the Beginning
Nearly half of large businesses have fallen victim to some form of cybersecurity issue. The number of cybersecurity incidents for smaller businesses is much smaller because hackers focus on larger brands. With that in mind it’s still important that small businesses are not complacent. For while large corporations have the resources to recover from a cyber-security issue, small businesses will often experience just one attack which could put them completely out of business.
A cyber-attack has the potential to put an entire company and its customers at risk. It can lead to a devastating loss of consumer confidence, profits, and overall growth. All businesses must have a defence against data infringements. Small businesses seem to underestimate the threat that their lack of cyber-security is to their business. It’s essential that businesses of all sizes take the necessary steps to secure their data.
Certain essentials are already being written into regulations in various countries. Businesses that seek government contracts should exceed these regulations. I fully expect the rules to become even stricter in the coming years for protecting consumer data. Not to mention, consumer awareness has increased. In short, everyone expects to have their data protected and they will not want to knowingly provide information to businesses that do not have a plan to protect them.
There Is No Way to Completely Prevent a Data Violation
All we can do is take steps to minimize the impact of the data compromise, when or if it happens.
Businesses Must Become GDPR Compliant
The GDPR is a European set of regulations that are protect the personal data of its citizens. It creates a regulatory framework that businesses operating in Europe must follow. Even though it seems like a lot of steps to take, these regulations protect businesses from themselves. I highly encourage all businesses – whether you are operating in Europe or not – to comply with these steps. It will protect your customers from potential violations in data.
In today’s world, all aspects of life revolve around data, so we must protect it. This might require businesses to invest more money into their cyber-security systems, but I assure you that the costs of a data breach will be much higher.
To become GDPR compliant, businesses must collect data using strictly regulated systems. They must also layout their entire data management system in detail. This includes how they gather, protect, and store data.
There must also be a written policy in place that defines the process a company takes should a data breach occur. Businesses operating in Europe will face hefty fines for not following these regulations. However, even businesses outside of Europe could potentially face expenses with a data infringement, including lawsuits and a loss of consumer confidence.
Damages From Data Breaches
Loss in Revenue:
- It’s common for businesses to lose a lot of money when a data breach occurs. Not only does the business lose consumer confidence, but they also have to pull down their systems to examine the nature of the loss. This leads to downtime that can cause disruptions in business processes and leads to customers seeking alternatives.
Brands Experience Reputational Damage:
- Data breaches can cause consumers to stop trusting a brand with their personal information. The initial reaction is for their data to be deleted.
Hidden Costs Associated with a Data Breach:
- Most of the financial costs of a data infringement are not as apparent as other expenses. Depending on the severity of the breach, legal fees and fines might play a huge role.
- Some data infringements are not going to compromise the security of consumers. But these pranksters will make subtle changes like changing the phone number or email address. It’s important to keep a watchful eye on these items.
Protect your Business from Online Data Breaches
To help businesses protect against data breaches, there are certain regulations being put in place that provide a blueprint in the form of obligations. The GDRP has taken the forefront of these regulations, requiring companies to hire a DPO officer and provide a written data security policy. These are both great practices that all businesses around the world should follow.
A DPO will provide a written data protection policy by using a market research service like Research Optimus to determine the most vulnerable areas. The vulnerable areas will change depending on the industry and data being collected.
In addition to bringing in a DPO, here are a few steps that can be taken to protect data further:
Raise Awareness Across the Company
Changing the company attitude toward data security should always be the first step. That’s why having a written policy in place is so beneficial. So many employees don’t know how to handle emails from unknown sources, or they don’t create strong passwords.
Create a sense of urgency when it comes to data. Businesses often don’t have the right mindset when it comes to data security. “It won’t happen to me” is a common mindset. Make data security a priority so that there is a sense of urgency within the company.
Create and reinforce strict data permissions. In most cases, data infringements happen because hackers find a back-door into the system. For instance, an employee who creates a weak password is leaving the door open for hackers to gain access to their account. Restrict data to the required personnel only to lower the risk of someone accidentally leaving a back door open.
Data breaches are not temporary issues. They can have lasting repercussions, and businesses are wise to take steps to avoid them. Consider finding a market research service to pinpoint potential threats within your industry and then create a policy that addresses those threats.
About the author: Gracie Myers is a content writer at Research Optimus . She enjoys writing on various topics mainly associated with Research. Her famous articles are on the topic of Business Research, Market Research, Business Analytics and many more.