Data breaches happen when hackers steal personal information from companies. They use this information for identity theft, fraud, and other criminal activity.
A business experiencing a data breach may not recover. Reputational damage, loss of clients, and lawsuit after lawsuit, it can become too much, especially for smaller businesses.
The truth is that no company is 100% safe from a data breach. As technology evolves, hackers get better at what they do using AI and machine learning to test their malware and poisoning AI models says TechTarget.
Defenders are always a step behind the attackers. However, you can always do something to make sure the company is less sensitive to such attacks.
Consequences of a Data Breach
Let’s get to discussing the consequences of a data breach, including:
- Financial Loss
- Brand reputational damage
- Loss of staff
A recent IBM report on the consequences of a data breach showed that the average cost rose to around $4.4 million this year. A small business would struggle to fund its recovery. Plus even if they pay the ransom and regulatory fines, there are ongoing costs to turn around the damage to the brand.
Compliance costs, including cyber security audits and certifications to prove to customers systems are secure, are hefty, and there are also security training fees to pay for too.
Most cyber-attacks are ransomware, phishing, and the results of stolen or compromised credentials, which shows that the companies compromised were not prepared against the most common types of breaching and lacked security training and knowledge.
What’s worse is that besides these data breach costs, businesses still need to fund the usual operational costs like salaries, rent, and subscription fees.
Lawsuits and liability
Lawsuits are common, so they’re not a showstopper; however, funding them can be what makes a business fail.
T-Mobile was fined $350 million following a data breach that affected around 77 million customers. The company had to pay the sum to fund claims and the costs of administering the settlement. After the incident, T-Mobile stated that they would invest $150 million for 2023 in data security and related technology to avoid the breach affecting them.
Other examples of notable businesses hit with lawsuits include:
- Instagram with $403 million
- WhatsApp with $255 million
- Uber, with $148 million
With people able to file for compensation when their personal data is disclosed, companies have no choice but to pay the consequences, which is where cybersecurity insurance is valuable. Did you know 66% of SMBs would fail following a large data breach?
Staff retention and hire
Your skilled employees may not want to be part of a business with a damaged reputation, so they leave. Staff retention will be problematic as well as finding replacements. Plus, given that during a data breach, employees are the ones on the frontline, answering mad customers’ calls and working overtime, almost any company would find it challenging to manage their well-being effectively. Not only does your business need a recovery plan, it also needs a cyberattack prevention plan too.
5 Steps To Prevent A Data Breach At Your Business
There are actions you can take to prevent a data breach, including:
- Create an Incident response plan
- Train employees on security awareness
- Monitor employee activity online
- Implement two-factor authentication
- Encrypt sensitive information
Incident response plan
It’s important to develop an incident response plan so that you can respond quickly and effectively to any security incidents that occur. This includes notifying law enforcement, contacting affected individuals, and taking steps to protect against future attacks.
Train employees on security awareness
One of the easiest ways to prevent a data breach is by educating employees on keeping personal information secure. You should also train them to report suspicious activity and notify authorities when necessary.
Monitor employee activity online
Employees often use social media sites such as Facebook and Twitter to share confidential company information with friends and family. This can lead to a security breach if an employee posts sensitive information online without authorization.
Now is the perfect time to start if you haven’t implemented two-factor authentication (2FA). 2FA adds another layer of protection against unauthorized access to your account by requiring users to enter a second code when logging into your site. It also helps protect your business from phishing attacks, where hackers trick people into giving up personal information.
Encrypt sensitive information
One of the easiest ways to prevent data breaches is to encrypt sensitive information. This means scrambling the information so that only authorized individuals can read it. You should use encryption software such as BitLocker Drive Encryption, available with Windows 8 and later versions of Microsoft operating systems.
The consequences of a data breach can be devastating. Ensure your business is not in the 66% that wouldn’t survive a cyberattack. Use our five steps to prevent a data breach at your business. Plus, have an emergency fund and adequate insurance should the worst happen and your business is sued for data loss.