In an era defined by the relentless march of digital innovation, data has become the lifeblood of modern businesses. From customer profiles and financial records to proprietary research and development, organizations of all sizes rely heavily on data to make informed decisions, improve operations, and stay competitive in an increasingly interconnected world.
However, this reliance on data comes with a significant caveat - the constant threat of data breaches. These breaches, characterized by unauthorized access, theft, or exposure of sensitive information, are unequivocally bad for business.
In this age of information, where trust and reputation are paramount, data breaches can inflict severe and lasting damage to a company's financial stability, customer relationships, and overall success. This article delves into the multifaceted reasons why data breaches are detrimental to businesses and underscores the critical importance of robust data security measures in today's digital landscape.
Then, we’ll offer some valuable insights about ways to protect your data and best practices for preventing breaches. Here we go…
What You Need to Know
In the first of two articles by CloudMask, they wrote, “Data breaches are becoming more frequent while government agencies are tightening breach notification requirements. When your business suffers a data breach, you have to report the incidents to authorities and inform those whose data has been exposed to know about the breach. Your business may also be fined and suffer legal complications. Costs resulting from data breaches are mounting, and the risks of not taking action are starting to threaten the ability of a business to continue normal operations. You either have to develop an action plan now or be forced to implement such a plan after a data breach that comes with high additional costs.
What Is A Data Breach
A data breach is the unauthorized movement or disclosure of sensitive information to a party, inside or outside the organization, that is not authorized to have or see the information. Key features are the ability to see the data and the lack of authorization.
The traditional way is to prevent the attacker from accessing the data through hardened network perimeters through firewalls, security segmentation, creating a strong password, and by using other techniques to protect the data location.
With the use of cloud computing and the increase in the complexity of the attacks, using only traditional perimeter protection to keep unauthorized individuals out is not enough. Every breach of your network will result in a data breach. For example, if you rely on usernames and passwords for access to your network, anyone who obtains a valid username and password can access your network and read your data. In that case, every unauthorized network access can result in a data breach.
To avoid data breaches, you need a second level of protection centered on protecting the sensitive data itself, not accessing the data. A security failure giving access to data that can’t be read will not be considered a data breach. An action plan focused on protecting sensitive data so unauthorized individuals can't read it can provide adequate protection against non-compliance with data protection regulations.
Data Breach Costs And Regulatory Compliance
According to the National Conference of State Legislatures, almost all states now have data breach notification requirements. In Canada, they are part of the Digital Privacy Act. Many other countries internationally either have such laws or are considering them. Laws and regulations typically specify what constitutes a data breach, who has to be notified, what form the notifications have to take, what remedial action is required, and what legal sanctions will apply. Costs for compliance can be substantial and can stretch out over an extended period.
Direct costs from notification requirements far exceed the costs of actually informing concerned parties of the breach. In addition to the cost of sending out the notifications, there are costs for customer support, compensation for damages, and payment card replacement if financial data has been exposed and you lose your reputation.
Indirect costs may include legal expenses to fight lawsuits such as class action cases brought by consumers, claims for damages by business partners who have notification costs due to your data breach, and claims from investors. Fines and penalties may be high, and regulators may impose jail time for negligence.
With these tightening notification requirements and the increased costs of dealing with data breaches after they occur, you need a cost-effective way of reducing your risks. Businesses are looking for ways to avoid notification requirements by changing the way they store sensitive data. When private data remains secure even when a security failure allows unauthorized access to an IT system, then data breach laws and regulations may not be triggered.”
Data Breaches: Threats and Consequences
In the second article by CloudMask, they wrote, “This article is the second of a series that explores data breach risks and issues related to regulatory compliance, associated costs, and loss of reputation. In “Threats and Consequences,” we look at the types of cyber threats and what the consequences might be for businesses that suffer data breaches.
As described in the first article of the series, “What You Need to Know,” a data breach occurs when one or more individuals are allowed to read data they are not authorized to access. Once they can read the data, they can steal it and often make changes to it. Depending on the type of data involved, the consequences can include the destruction or corruption of databases, the leaking of confidential information, the theft of intellectual property, and regulatory requirements to notify and possibly compensate those affected.
The costs associated with such incidents can be very high and, in some cases may threaten the ability of a company to continue in business. As a result, it becomes extremely important for businesses to identify the threats and reduce their exposure.
Data Breach Targets
Business data only becomes a target when it is of value to a third party. Different kinds of data are more or less valuable to third parties and represent different levels of risk to a business. The different types of data include the following:
These types of information attract the attention of third parties for whom the data has value. Personal, financial, and health information can be sold and used for marketing, fraud, and identity theft. Intellectual property can be sold and used to develop products and services similar to those of your business. Competitive information can be sold and used by your competitors to block your plans, and leaked legal information may damage your legal position. Data on IT security is a valuable target in itself because it lets unauthorized parties gain access to all the other types of information on your system.
Data Breach Threats
Threats targeting the different types of data can come from your own employees, from suppliers and consultants who have access to your network, and from individuals outside your organization. They can gain access to your data from inside your network, through external email accounts, through mobile devices, and through the cloud if your business stores data there. Traditional perimeter protection is no longer enough to keep your data safe from these threats.
Data protection can fail against insiders. Disgruntled employees may decide to leak sensitive information. External individuals can use emails or malicious websites to install malware on employee computers and get user names and passwords that way. Employees of your cloud services supplier often have access to cloud data, and email accounts and mobile devices can be lost, hacked, or compromised. In the face of such threats, companies have to identify the consequences of corresponding data breaches and find solutions that reduce their risks.
Data Breach Consequences
The consequences for businesses that experience data breaches are severe and increasing. This is mainly due to the increased regulatory burden for notification of the individuals whose data has been compromised. Notification requirements and penalties for businesses suffering a data breach differ with the jurisdiction, both within the United States and Canada and internationally.
Companies that experience a data breach involving customers have to establish where their customers reside and which regulatory authority has jurisdiction. Regulations define the type of data for which notification is required after a breach, and they define who has to be notified, how the notification has to be carried out, and whether specific authorities have to be notified. Typically, breaches involving personal, financial, and health data are subject to notification requirements, but exact definitions vary for different jurisdictions. Companies doing business internationally may have customers in many jurisdictions and may have to comply with a variety of requirements. The costs of such a process, together with legal penalties, possible compensation for damages, and any resulting lawsuits, can be high enough to constitute an existential threat to some companies.
Data breaches involving other types of data can severely impact the reputation and business situation of a company. In addition to contractual obligations that may be impacted, the planned sale of a company could be put in question by a data breach, as recently happened with the Yahoo purchase by Verizon. If your competitors become familiar with your business strategies and are able to market products similar to yours at a lower price, your business might not survive.”
How to Protect Your Business From a Data Breach
In excerpts from an article by Business.com, they wrote, “Data breaches are a common threat to businesses of all kinds and sizes. Stolen information or data corruption can cause irreparable harm and become a financial burden. IBM found that the cost of a data breach in 2023 was a record-breaking $4.45 million, and it took around 277 days, on average, to identify and contain a breach.
No matter the size of your business, you need to protect your information by preventing data breaches. Here are some proven strategies for keeping your data and sensitive customer information safe.
Here are four steps you can take to protect your business’s data…
1. Evaluate your security procedures.
The first step is to look at your current security protocols. Layering your security capabilities is the best approach because hackers will have to infiltrate multiple safeguards before accessing any sensitive data. Tools such as firewalls, encryption, secure file-sharing software, and antivirus software protect sensitive data from falling into the wrong hands.
If your cloud-based data-storage service offers security tools, you should still configure your own safety measures. Limit cloud access to employees and use an extra layer of protection, such as multifactor authentication or single sign-on. [Learn more about cyber insurance.]
Back up data frequently so that if a violation occurs, your system will be restored quickly and easily with the most current data. Also, conduct screening and background checks on new hires, and mandate security training. Make sure all virus-scanning software stays current, and delete any suspicious files right away.
2. Protect your cloud and data.
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To develop a more comprehensive cloud security strategy, consider using a cloud access security broker (CASB). These software platforms offer continuous visibility, data security, monitoring, and governance for all cloud-based file storage. The CASB data protection feature uses machine learning and user behavior to discover unauthorized users and events. The organization can then use the CASB to respond in real-time, thus preventing hackers from gaining access to sensitive information. Even when you are not watching the system, the software will block any unauthorized attempts to reach your data.
Visibility is another crucial element of cloud security. CASBs alleviate visibility issues by auditing a company’s cloud services and sanctioning useful products while blocking risky ones. CASBs also provide data security capabilities, such as encryption and tokenization.
Improper configuration and weak security procedures are a growing cause of cloud data breaches. These types of leaks are often overlooked since they usually occur because of insiders and companies’ assumptions that the cloud service providers will protect their data. In fact, based on the shared responsibility model, the user, not the cloud provider, is responsible for cloud security.
Prevent these issues by enforcing strict password policies and user access controls. Make sure your cloud data storage is private and available only to the users who need it. A CASB can also help with this by monitoring and configuring your cloud services to maximize security.
The more layers of security you can add, the more protected your data will be. As with cloud technology, limit employee access with unique codes and biometrics. Only essential employees should have access to sensitive company data.
3. Train your employees to follow security procedures.
Your data security requires that employees understand your policies and procedures. Clearly define password requirements, user access rules, and any other security measures. Give examples of different scenarios people use to gain information. Alert employees about telephone callers requesting personal or business information.
Although many people can spot email scams, teach employees to recognize less-obvious ones, like phishing, in which emails appear to have come from official companies but instead contain malware. View any request for sensitive information as suspicious and warn employees not to click email attachments or links. In other words, if you did not ask for the document, don’t open it. Hackers and thieves are inventive, so alert your staff of any new schemes you hear about.
One of the most common uses for information obtained through data breaches is identity theft. You must protect yourself, your employees, and your customers from becoming victims. Medical clinics are at incredibly high risk because of the confidential information they store about patients. Plus, you need protection from liability if that information gets out. Make sure all employees and anyone else with permission to access your data know the security procedures and follow them closely. Failure to enforce these rules leads to costly mistakes.
Data breaches take many forms, and hard-copy files are susceptible to theft, too. Institute a clean-desk policy so that no one leaves files visible at the end of the day. Make sure all employees know retention guidelines and shredding procedures. Don’t allow documents to stack up while waiting for shredding. If you cannot destroy documents quickly, hire a service to come at scheduled times to shred your unneeded files.
4. Respond when a mistake happens.
Despite your best prevention techniques, your company may still experience a data breach. Learn from data security mistakes by examining what happened. Ask yourself how the company can do a better job of protecting its information and, if necessary, win back customer trust. If a breach occurs, act within 24 hours. Designate a team of key leaders and assign roles and responsibilities. A quick response helps employees and clients regain a sense of security.
Stay up to date on laws and regulations regarding the proper disposal techniques for sensitive files and data. Although technology allows more convenience, it also introduces dangers. Connecting more devices — like smartphones, tablets, and even smartwatches — gives hackers additional ways to break in and obtain personal and proprietary data.
Keeping your company information secure and preventing media scrutiny involves more than one step. The days when a username and password offered enough protection are over. Make sure your company uses the latest software technology to safeguard digital data and don’t forget to secure paper documents as well. Data security resources are a necessary part of today’s business world.
Types of business data breaches
These are a few of the most common types of business data breaches:
What to do if your company’s data has been breached
Identify the source and extent of the breach.
First, assess what type of breach it was and what data was compromised. Businesses should have intrusion detection or prevention systems to track these things. However, it will be difficult to identify the breach and its cause without these systems or software.
Take security to the next level.
Work to fix the issue or vulnerabilities in your security systems. If the breach was the result of employee errors, such as clicking an email link that implanted a virus or using a weak password, train your employees to recognize phishing emails and other scams and encourage them to use stronger passwords.
Talk with legal authorities.
Each state has different requirements for reporting data breaches. Contact legal authorities to discuss the breach, the time frame in which you need to inform the affected parties, and exactly what needs to be reported.
Notify those who were affected and neutralize the breach.
Customers must be notified so they can take action to change passwords, cancel credit cards, and otherwise protect themselves. Be honest and provide context about the situation. By acting quickly, you minimize damage and loss of trust in your business.
Bottom line: Your business will need to rebuild trust with customers after a breach, but they’re more likely to trust you if you are honest in your communication.”
17 Security Practices to Protect Your Business’s Sensitive Information
In a separate article by business.com, they wrote, “Cybersecurity starts at the top of the business. Your staff will be compelled to make cybersecurity a priority only if it’s important for the organization as a whole.
To create an effective cybersecurity plan for your business, first, you need to carry out a cyber risk assessment that lists what is valuable and may be vulnerable to theft. Then, you must understand how your current IT infrastructure and your co-workers could help enable such an attack.
Once you understand the specific cyber risks, implement plans and procedures to protect against these vulnerabilities. If you don’t have an IT department in your business, it’s wise to hire an outside expert to help you create and implement a plan. It might cost money now, but it could save your business in the long run. A consultant may recommend that you establish an annual cybersecurity budget for equipment, software, and training.
Here are 17 important cybersecurity best practices to follow.
1. Teach your staff about cybersecurity.
Any cybersecurity expert will tell you that, no matter how stringent your firewalls are or how much your IT equipment costs, the biggest vulnerability to your business is not the technology itself. Instead, 88 percent of all data breaches result from mistakes by employees, according to Tessian.
That’s because your staff is either unsure of what to do when confronted with a particular circ*mstance or they don’t perceive it as a threat. For example, a request to click a link in an email to reset an account experiencing “unusual activity” is likely an attempt at cyber extortion, as is an allegedly internal call from IT asking for a user’s password.
In your training, emphasize that the most significant risk comes from criminals trying to trick your employees into doing something rather than from people hacking into the company’s Wi-Fi. The key is to teach them the signs to look for and, when something seems wrong, what they need to do about it.
Tip:
Monitor how your staff does post-training, and encourage managers to give feedback. When someone does spot and prevent an attack, celebrate it among your team and reward them.
2. Set internal controls to guard against employee fraud.
Regardless of how much you trust your employees, it’s wise to use internal controls to limit your risk of employee fraud. Otherwise, employees could misuse company funds or steal customer information.
Limit each employee’s access to the information they need for their job. Make sure your systems log the information each employee accesses. Segregate duties to prevent a single employee from having too much responsibility. For example, instead of having one employee make purchases and go over expense reports, split those tasks among two employees.
3. Keep your software updated.
Cybercriminals are a curious mix of devious and ingenious. The rewards of a successful hack can be so great that they will work for weeks or months to find “zero-day vulnerabilities,” which are obscure ways to sidestep the internal security workings of a popular program to infiltrate companies’ computer networks.
No app or software is 100 percent secure at the time of launch. Loopholes and exploits are found all the time, and in response, vendors release patches and updates to protect their clients. As part of your new cybersecurity policy, ensure that every time a vendor releases a patch, you update your version of the software the same day.
If your vendor no longer supports a product, this represents an escalating probability of disaster. In this case, switch to an alternative that is supported.
4. Use difficult-to-guess passwords.
Computer security experts have advised consumers and businesses for decades to choose secure passwords for logging in to computer networks, online accounts, and business apps. This is still superb advice.
To take more control of this, consider instituting centralized password management across your business. In addition, use multifactor, fingerprint, or biometric authentication as a second line of defense.
5. Guard your wireless networks.
Business Wi-Fi is not as safe as you might think. Although it’s getting faster, especially since the release of the 802.11ax standard, it’s only as secure as the protocols you put in place.
Here are some tips for protecting your wireless networks:
6. Use encryption on all types of data.
Encryption transforms data into something called ciphertext, which is indecipherable to anyone without an encryption key. There are three types of data: in transit (data that’s going from one place to another), in use (data that’s being used by a device in a process), and at rest (data that’s not being used at all).
All three types of data are at risk, so it’s better to use encryption across your entire network, including cloud connections, so that if a breach were to occur, a hacker would not be able to make sense of the data.
7. Back up your data every day.
In a ransomware attack, a hacker will hold your computer network, data or both hostage until you pay them. If your data exists only on your internal network, you are vulnerable to a ransomware attack. Even if you do pay up, there is no guarantee that they will release your data; they may still destroy it or distribute it for all to download online.
If you back up your data every day and a ransomware attack occurs, this is still serious. However, your IT team or contractor can work to release control of the PCs without worrying that doing so will destroy the only copy of the data. When the problem has been solved, your IT team or contractor can safely load the software and data back onto your network.
Did You Know?
Cyberattacks can be very costly for businesses. In addition to losing valuable information, companies must pay up to remedy the problem and often lose revenue as a result of reputation damage. According to IBM Security, the global average cost of a data breach was $4.45 million in 2023.
8. Switch to the cloud.
Many companies want to keep their data on physical hardware on company premises, but more businesses are switching to storing data exclusively in the cloud or using a hybrid approach. Cloud services automatically back up your data online every time you or a colleague takes an action.
Cloud encryption is often far superior and harder to crack than any internal solution you have to protect your on-premises networks, thus affording your data an even greater degree of security.
9. Store physical documents securely.
Cyberattacks may be a more common threat, but lost or stolen documents can be just as bad. Whenever documents contain sensitive information, It’s important to keep them safe from prying eyes. Store documents in a locked file cabinet or room that only your most trusted employees can access. Dispose of documents by running them through a shredder.
10. Keep a device inventory.
Consider allowing only authorized devices to log on to your network, cloud, and software. That way, staff can still store and transfer information via laptops, smartphones, tablets, and flash drives, and if you operate a bring-your-own-device policy, colleagues still have the access they need.
But if a device is lost or stolen or a member of your team who regularly uses a device to log in to your system moves to a new employer, you can remove that device from your inventory permanently.
11. Save only what’s necessary.
The more information you collect about your customers and employees, the more you need to protect them. Companies often save more information than is necessary, and their customers are the ones who suffer if a data breach occurs.
To limit what hackers could steal, save only the information you absolutely need to run your business. This is called data minimization. If you need information only temporarily, get rid of it properly after you’ve used it.
12. Pay for expenses with a business credit card.
For business expenses, the best and most secure payment method is a business credit card. Most will have zero-liability fraud protection, and if you need to dispute a transaction, you won’t lose any money during that process. You can set spending limits on employee cards and receive immediate notifications of transactions via text alerts.
Any payment method has its risks, but credit cards have the most safeguards and security features. Security isn’t the only benefit of business credit cards; they also provide detailed expense reports and the opportunity to maximize your travel rewards.
13. Monitor your employees’ accounts.
Any employee account is a potential hacker’s portal to your most valuable information. To protect your business from employee account hacks, you should analyze their logs and behavior while setting rule-based alerts. In doing so, you can identify unusual login attempts that often indicate a hacker inside the account.
14. Create firm employment agreements.
In all your job contracts, include text that forbids your employees from sharing certain types of information. Every time an employee shares information, they transmit data through a channel that, even if highly secure, could theoretically be breached. If this information isn’t shared in the first place, it can’t be accessed.
15. Plan your response to data breaches.
You always need to be prepared for a worst-case scenario. How you respond to security incidents can be the difference between a minor data loss and a costly breach. Your plan should include the following steps:
Close any holes immediately. Disconnect and shut down any compromised computers, and stop using any compromised programs.
Notify the appropriate parties. Depending on what information was stolen, you may need to notify customers and law enforcement.
Investigate what happened. Conduct an internal review or hire an agency to find out what went wrong.
16. Stay up to date with your cybersecurity.
A cybersecurity program can protect your business from malware and other threats. Look for a paid program that can secure your network and every device on it. The money you spend is well worth it, as a breach could cost you much more. Once you have your cybersecurity program in place, install all updates immediately.
For example, in recent years, machine learning tools have been successfully used to stop spear phishing attacks. The money you spend to protect your staff from exposure to phishing and other extortion attempts will be a good investment.
17. Run regular cybersecurity audits.
The nature of cybersecurity threats changes constantly as new attack vectors are identified and exploited. Run a cybersecurity risk assessment at least once a year to check that your previous assumptions are still true. Ask yourself whether the ways you currently deal with them are effective.
For newly identified threats, use the same approach to identify what’s valuable and vulnerable to those threats and the best way to defend it with your technological and human firewalls.
Preventable security issues have brought down many small businesses. Although you can’t eliminate the possibility of data breaches or fraud, with the right security practices, you can reduce their likelihood and minimize the damage if one does occur.”
In conclusion, data breaches pose a significant threat to businesses in today's digital age. The reliance on data for decision-making and operations makes companies vulnerable to unauthorized access and theft. The consequences of data breaches are severe, ranging from financial losses to damage to reputation and legal complications.
Compliance with data protection regulations is crucial, given the tightening notification requirements and potential fines. Protecting sensitive data through comprehensive security measures, employee training, and regular cybersecurity audits is essential. While no system can be entirely immune to attacks, implementing strong security practices can reduce the risk and mitigate the impact of data breaches on businesses.
At Adaptive Office Solutions, cybersecurity is our specialty. We keep cybercrimes at bay by using analysis, forensics, and reverse engineering to prevent malware attempts and patch vulnerability issues. By making an investment in multilayered cybersecurity, you can leverage our expertise to boost your defenses, mitigate risks, and protect your data with next-gen IT security solutions.
Every device connecting to the internet poses a cyber security threat, including that innocent-looking smartwatch you’re wearing. Adaptive’s wide range of experience and certifications fills the gaps in your business's IT infrastructure and dramatically increases the effectiveness of your cybersecurity posture.
Using our proactive cybersecurity management, cutting-edge network security tools, and comprehensive business IT solutions, you can lower your costs through systems that are running at their prime, creating greater efficiency and preventing data loss and costly downtime. With Adaptive Office Solutions by your side, we’ll help you navigate the complexities of cybersecurity so you can achieve business success without worrying about online threats.
To schedule a Cyber Security Risk Review, call the Adaptive Office Solutions’ hotline at 506-624-9480 or email us at helpdesk@adaptiveoffice.ca
