Data breaches are becoming more prevalent in the digital age with yahoo holding the record for the largest data breach of all time with 3 billion compromised accounts as of January 2021.
In the past few years, major corporations have been hacked and had their customer's data stolen by hackers. We all know how disastrous this can be to a company's reputation.
It is important to understand the financial implications of data breaches on businesses, as they can lead to many different problems - they can expose sensitive data such as credit cards and social security numbers.
As mentioned on Skurio's microsite, fraud had cost the UK economy a total of approximately £137 billion in 2021. This number has been steadily increasing over the years as hackers have become more sophisticated in their attacks.
However, there are numerous steps you can take on your end to reduce, including making sure all of your security measures are up-to-date and ensuring any third parties with access to customer data have strong security measures.
What are Data Breaches and How Do They Occur?
A data breach is when confidential data, such as social security numbers or credit card information, is stolen by hackers.
Breaches can occur in many ways but the most common way is through phishing emails that are sent to employees. The email will look like it's from a legitimate source but once opened, the malware within the email will infect the computer and steal information.
Another way that data breaches occur is through third-party vendors. If a company shares customer data with a vendor, and that vendor's security measures are not up to par, the data can be easily stolen.
Finally, hackers can also gain access to companies' networks by hacking into their systems.
The Financial Implications of Data Breaches on Businesses
When companies are hacked and their data is stolen, they must deal with both the immediate costs of fixing the breach as well as any adverse effects that may stem from it.
The most common costs associated with data breaches are forensic investigation, notification of affected customers, and credit monitoring services.
Forensic investigations can be very costly - they involve hiring a team of experts to determine how the breach occurred and what was stolen.
Notification of customers can also be expensive as companies need to send emails or letters to all of their customers to let them know they have been breached and provide steps that can be taken to protect themselves.
Credit monitoring services are another major cost associated with data breaches as companies need to monitor any changes in the credit reports of affected individuals for up two years following a breach or until there is no longer an increased risk, whichever occurs first.
In addition to the direct costs of data breaches, there are also other indirect costs that businesses may incur. These include:
Loss of customers - When companies' customer data is stolen, it can lead to them losing customers as they may not feel safe doing business with them anymore.
Damage to brand and reputation - A data breach can have a major impact on a business's brand and reputation if their customers start associating them with the negative aspects of being hacked.
Lawsuits - There is always a chance that businesses could be sued by individuals whose data was stolen as they may want to recover any damages incurred, such as identity theft or credit card fraud.
How You Can Minimise the Financial Implications of Data Breaches on Your Business
While data breaches can be very costly, there are some steps you can take to minimise their financial impact. The most important thing is to make sure that all security measures in place at your business - from employee training and education programs to firewalls - are up-to-date.
You should also carefully vet any third-party vendors you work with and make sure that they have strong security measures in place.
Finally, it's important to have a data breach response plan in place so you know what steps need to be taken if your business is hacked.
How to Protect Your Business From Data Breaches
There are a number of ways businesses can protect themselves from data breaches. The most important is to ensure that all security measures in place - from employee training and education programs to firewalls - are up-to-date.
It's vital to make sure that your staff is well-trained and informed about cyber security to avoid data breaches since they will be more aware of the dangers present, how hackers operate, and what they should do if their company is under attack.
Updating the technology you use to safeguard your data (such as firewalls and anti-virus software) might also help minimise your chances of being hacked.
You should also make sure that everyone has only the access they need, and that their passwords are complex and unique.
Businesses should also carefully vet any third-party vendors they work with and make sure they have strong security measures in place.
It's also important to have a data breach response plan in place so you know what steps need to be taken if your business is hacked.
Data breaches can have a significant financial impact on businesses. Companies should take all necessary steps to protect their data from being stolen, including implementing strong security measures and ensuring that any vendors they work with are also protected.
If you are affected by a data breach, the best thing you can do is to be vigilant about your personal information and report any suspicious activity to the appropriate authorities.