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If you cringe every time you see a headline about a massive data breach, fasten your seatbelt. It’s going to get much worse before it gets better. For most companies, it’s a question of when not if they’re going to have a data breach. The bigger question is how big the blast radius is going to be and what can you do preemptively to avert or contain it.
The facts are sobering: The average annual cost of a data-security breach for a company that misuses or loses data is $4.24 million, according to a recent IBM security survey, nearly 10% higher than it was before the pandemic. And that’s just the initial price tag. The real cost of a data breach cuts much deeper and can be existential: 60% of small- and medium-size businesses go bust within six months of a massive data breach.
Sadly, despite these statistics, most companies still don’t view data security as a top priority. If your company uses, collects, stores or relies on first-party data (and what successful company these days doesn’t?), you face all kinds of security-related risks that can make that $4.24 million seem like a bargain.
Here are eight ways a data breach could take out your company in a hurry.
1. Someone misuses the data you collect
Here’s a shocker: One in four data breaches is caused by employees rather than outside attackers. That’s important because your company is not just on the hook for securing data you collect; you also need to secure how it’s used. Thanks to the EU’s GDPR and California’s CCPA privacy laws, if someone in your company (or one of your partners) misuses your data, you face steep fines. And if you are fined 4% of the topline for simple data misuse, it could bankrupt your whole company.
2. Your data breach gets media attention
A data snafu at scale is a PR disaster. It erodes consumer trust in your brand and customers’ trust in your relationship. A recent PwC report found that 69% of consumers believe that the companies they use are vulnerable to being hacked, and 87% of consumers are even willing to walk away if a data breach occurs. And that doesn’t even factor in the pricey marketing costs of rebuilding a damaged reputation.
3. Data mishandling exposes you to regulatory action
That’s right, misusing data can open you up to a whole new universe of penalties, fines, sanctions and legal costs, which can be enormous and go on for years. You could easily spend a billion dollars addressing your case — just ask Facebook about that one.
4. A data breach costs you deals
This one hits you directly in the wallet. Once you have a security situation, current business customers can shut off deals. At the very least, you’ll spend countless hours documenting your processes and reassuring partners their data and reputation are safe. And if a data-security issue leads to a court action or some regulatory action, all your business customers now have reasonable cause to back out too. Which leads to this next one …
5. Or it can cost you your entire business model
If the world decides that it just can’t afford to do things the way you’re doing them, you’ll have to change your whole model (we’re looking at you, Ashley Madison). The pivot can be an expensive and existential threat.
6. Lax security locks you out of the deal flow
Once you’re caught in a security disaster, you can be labeled as a business risk in an ecosystem. And that basically cuts you out of a marketplace.
7. Security snafus are a massive time suck
All the time and suffering a security problem demands, especially the attention of key people in the organization, can be a massive operational setback. Plus, who wants to work for a company with a bad rap? Suddenly you can’t attract or retain the most mobile and valuable talent.
8. Data breaches devalue your business
If you can’t secure your data, you won’t be able to do all the good things that can be done today with the secure application of data. And that’s the risk of not doing the right thing for the business — and not realizing your company’s full potential and upside. And that might be the biggest risk of all.
Managing all this risk isn’t easy, and there are lots of stakeholders to wrangle. But nobody’s got their eye on all the data — and all the ways data breaches could bite your company.
But there is one way to mitigate all these risks: Deploy technology that prevents risk from even being created, rather than just tools to clean up better after a breach or violation.
You want technology that does three things well:
- Enables the creation and enforcement of a digital version of the sharing agreement or contract.
- Allows the data to be processed inside a shared enclave.
- Documents every transaction and communicates to the relevant parties, so only agreed-upon recipients receive the insights from processing.
You’ll save money on legal fees and improve productivity since only the most necessary approvals will be required by expensive attorneys. And since you can now trust your data-sharing partnerships, your insights will soar along with accompanying revenues from such projects. You owe it to yourself to have a fully automated security solution that’s got your back.
Your company’s survival depends on it.