A data breach occurs when one or more unauthorized individuals gain access to confidential information, typically by way of social engineering or a malicious software attack. Once they’re able to gain access to this data, they’ll be able to misappropriate it by reselling it on dark web marketplaces or using it to carry out more advanced attacks. As organizations become more reliant on different IT products and services, they risk boosting their exposure to threats both within and outside the organization. The stakes are higher than ever too, with the impact of a successful breach worsening by the day. Here are four ways a data breach can put the future of your business in jeopardy:
#1. Unscheduled downtime
As soon as a business discovers a data breach, it’s crucial to take every necessary step to stop attacks still in progress and quarantine affected systems. However, if those include mission-critical systems that your business simply can’t function without, your operations will screech to a halt and employees won’t be able to work or serve their customers. Some attacks are even carried out with the sole purpose of causing widespread disruption, rather than stealing confidential data. Examples include ransomware attacks, distributed denial of service (DDoS) attacks, and any other attacks that render affected systems unusable. According to Gartner, the average cost of downtime is $300,000 per hour.
#2. Reputational damage
Industry compliance regulations state that, for data breaches of a certain magnitude, victims must disclose the incident to their customers. For much larger breaches, businesses may also be obligated to alert a local media outlet. Naturally, these obligations can spell reputational disaster, although it usually works in your favor if you are transparent about the incident. Even smaller, undisclosed breaches that don’t involve any customer data can cause indirect damage to your reputation by exposing your employees' inability to carry out routine tasks for the benefit of your customers. In fact, many businesses end up closing their doors within a year following a severe breach due to unacceptable reputational damage.
#3. Litigation fines
Compliance regulations like the Health Insurance Portability and Accountability Act of 1996 (HIPAA), the Sarbanes-Oxley Act of 2002 (SOX), and the Payment Card Industry Data Security Standard (PCI DSS) have clear requirements as to how businesses should protect their data. Although the exact technical specifications aren’t generally given, the National Institute of Standards and Technology (NIST) provides clear guidelines on what constitutes a robust data security, privacy, and compliance infrastructure. Businesses that fall short of these standards risk leaving themselves open to litigation, in some cases even before a data breach occurs. The fines for failing to comply with industry standards aren’t just steep in their own right — they can also introduce indirect costs, such as reputational damage and costly remediation processes.
#4. Financial loss
Perhaps surprisingly, direct financial loss is relatively low on the list of the ways a data breach can cripple your business. However, it’s still serious enough to be worthy of consideration. A lot of breaches are designed to steal confidential data for reselling, but some are carried out to misappropriate company funds directly. For example, ransomware attacks can lead to high losses if you’re forced to pay a ransom, while certain social engineering scams target financial accounts.
OC-IT provides enterprise-grade security solutions that mitigate threats inside and outside the organization. Our multilayered approach to information security helps you achieve compliance without the headaches. Call us today to schedule your free assessment.
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