A data breach can negatively impact your business, your employees and your customers for months and years. Before you can fully protect your company’s data, you must fully understand the implications of a data breach.
1.Data Breach Implications – The Aftermath of an Information Leak
Some of the biggest retailers in the world have suffered data security breaches in the past two years, and there are many smaller companies suffering the same implications outside of the media limelight. This is becoming more common as businesses take advantage of cloud apps like Box, Google Apps, Office 365, which makes it faster and more easier to share sensitive information for business purposes.
Unfortunately, not all companies are taking the proper precautions to secure their information against breaches due to user sharing errors (accidentally or deliberately). Whether the breach is due to a leak by someone within the company, a disgruntled employee stealing information or a third party gaining unauthorized access, the implications of a breach are far-reaching and can put even the most stable company in jeopardy.
2.Immediate Resource Drain
The immediate fallout after a breach leads to an intense resource drain, which places stress on the entire company. Manpower is stressed as clients affected by the breach start calling for information regarding the breach. You may need to enhance your customer service team or provide new training to team members to ensure clients receive timely and accurate information in a manner that is reassuring but not misleading.
There is a need for swift action to assess the weak spots in your security system and make changes to prevent future breaches. This may require around-the-clock attention from security professionals, and that comes with a big price tag in many cases. Adding protective services to guard against future attacks may result in an ongoing expense.
Consultations with lawyers and other professionals can also present an immediate drain on company finances. Legal assistance is required to understand your responsibilities to customers and ensure other interests are protected as you recover from the breach.
3.Ongoing Client-Related Fees
If the data breach involves private client information, your company may need to pay for credit monitoring or other services on behalf of clients concerned about identity theft as a result of the breach. You may need to set up a dedicated phone line to handle incoming calls related to the breach, and you may need to pay for credit monitoring and other services for up to a year following the breach. Multiply that expense by the number of clients affected by the breach, and you see that this expense alone is steep.
Clients place their personal and financial information in your hands out of trust. They understand that there is a risk when turning sensitive information over to anyone else, but they feel secure that you have taken measures to protect their information. When a breach occurs, it is a breach of that unspoken contract with individual consumers. Just as company executives are anxious to see whether the aftermath will affect their bottom line, clients are anxious to determine whether their information was involved in the breach.
Large companies with substantial information breaches end up making headlines, and that can potentially lead to substantial reputation damage. Customers think twice about swiping their credit cards in that company’s store or making online website purchases.
Small to medium-sized businesses may not have to endure media scrutiny, but they still have the obligation to reach out to all customers affected and reassure them that protections are in place to prevent future information attacks. There is still a risk that consumers will temporarily turn against the company out of fear.
Actions taken immediately after the breach will determine how fast consumer trust is regained. Reputation management requires professional assistance and additional expense, but it is essential for recovery after a breach.
5.Investigation, Control, Litigation
Beyond recovering your brand’s reputation and providing service to affected clients, you have the responsibility to fully investigate the breach and control all activity occurring in the aftermath. This requires a lot of coordination between employees, consultants and other professionals to ensure all necessary steps are taken in an effective manner.
In some cases, fines are issued from the state or federal government. Mediation and litigation with affected clients or with those responsible for the breach will bring additional expenses. These expenses may not be covered entirely by insurance.
6.Protecting Company Secrets and IP
One of the most costly implications of a breach is the compromise of sensitive company secrets. This varies depending on the nature of your business and the type of breach, but you may need to recover from exposure of information that helps your competitors or otherwise reduces the profitability of your business.