A data breach can be catastrophic for businesses relying on customer trust. For small businesses, the impact is even greater.
Attackers can steal confidential information from organizations with ease. Cybercriminals use every opportunity to gain access, from misplacing a mobile device to exposing sensitive data through cloud misconfigurations.
Loss of Confidential Information
Data breaches involve losing confidential information that can put individuals, businesses, and the government at a competitive disadvantage. This can lead to lost business, brand damage, and the loss of trust and confidence in digital products, services, and devices.
Hackers use various methods to gain access to private information, including social engineering attacks, directly exploiting vulnerabilities in IT assets, using stolen login credentials (either from brute force or purchase on the dark web), and utilizing malware like keyloggers. Many hackers also break into offices to steal personal electronic devices, portable drives or paper files and even use physical skimming devices to acquire payment card information.
Once attackers have the data they want, they often sell it in underground markets on the dark web. This information can be used to attack individuals financially through identity theft or sold to competitors for fraud and extortion. It can also be used to attack organizations through phishing scams and blackmail. It may even be used to attack governments if they expose confidential details of military operations, political dealings, or undercover investigations.
Identity Theft
When a company or organization suffers a data breach, your personal information could end up in the hands of cybercriminals. This puts you at risk of identity theft, which can cause issues, including ruining your credit (due to erroneous accounts opened in your name), losing job opportunities, and being denied bank loans or even apartment rentals.
Data breaches can happen in various ways, such as card skimmers attached to gas pumps or ATMs to steal payment information, malware attacks that exploit flaws in computer systems, and ransomware that holds computer files hostage until a fee is paid. They can also occur due to employee negligence, such as leaving a laptop unattended in a hotel room or mishandling paper documents.
Regardless of the cause, when you discover that your information has been breached, you must take immediate action to ensure your safety and protection. This includes checking your credit, canceling credit cards, and changing passwords. You may also need more trust in companies and organizations, making you reluctant to provide personal information to them in the future.
Reputational Damage
Data breaches can damage an organization’s reputation in the eyes of its customers, employees, and stakeholders. It can be difficult to overcome a damaged reputation, even after taking steps to fix the problem. People may associate a company with its breach rather than its business, leading to lost revenue.
A data breach results from a cyberattack in which malicious outsiders break into a company or government system to access confidential information, such as names, credit card numbers, or Social Security numbers. These criminals often sell this confidential information on the dark web or use it for financial gain. In some cases, criminals breach a company to steal trade secrets from competitors or sensitive information about military operations, political dealings or national infrastructure.
These crimes often occur when a computer or IT network is exposed to the Internet, software or hardware fails, or an employee opens a file or email attachment with malware. Criminals also exploit flaws in a system’s security perimeter to gain entry. For example, hackers target websites or mobile applications with software vulnerabilities to inject a virus that can infect devices or networks with malware.
Financial Loss
For businesses that suffer a data breach, the financial loss is immense. Not only do they have to pay compensation to affected individuals and comply with government/industry regulation mandates, but they also lose revenue and customer trust.
Attackers can use compromised information to commit fraud by stealing an individual’s credit card information, health insurance, SSN or even their name. They can then sell this data on dark web marketplaces, ruining an individual’s financial reputation, access to credit and putting them at risk for other fraudulent activities.
In addition, many breaches are caused by human error and a lack of security controls. Employees may save sensitive information to a non-secure location, or an IT staff member might inadvertently expose a vulnerable server or protocol to the Internet. Organizations must shut down operations when attacks occur to investigate the cause and identify vulnerabilities. This costs them both in lost revenue and hiring IT professionals to resolve the issue.
Legal Liability
It seems like a data breach hits the news every other day, and 2014 was a year of high-profile breaches that splashed celebrity gossip and entertainment industry chatter across headlines, as well as confidential business information such as financial projections and employees’ details. From credit card numbers and PINs stolen from major retailers to healthcare data being sold on the dark web, the risk of sensitive information falling into the wrong hands is real and widespread.
Even if a company can prove that it took all legally required and reasonably available steps to safeguard data before the breach, it may still be liable for any damages incurred by victims. That is because laws often include provisions requiring companies to provide victims with identity theft protection and monitoring services after a data breach or they must notify them within a certain period following the incident.
Small organizations often think they are too small of a target for cybercriminals and don’t take cybersecurity seriously enough, but a lack of preparation opens up vulnerabilities criminals can exploit. Then, if a breach does occur, it can hurt a small business’s reputation and lead consumers to seek out a competitor that takes data security more seriously.