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November 28, 2019
5 minutes

Effects of Data Breaches | Prevention Tips

Far-reaching Consequences of Data Breaches

A data breach might just be one of the most frightening scenarios for organizations, right after bankruptcy. Data breaches not only affect a company it can also take down its partners, collaborators, or associates. 

In the first six months of 2019, more than 3800 data breaches were publicly disclosed. And these breaches exposed a whopping 4.1 billion compromised records. But the most incredible thing is the fact that only 8 breaches were responsible for exposing 3.2 billion of those records. As for the type of data itself, emails were exposed in 70% breaches and passwords were exposed in 65%. 

This should give you an idea about the seriousness of data breaches and why companies spend a fortune trying to guard against them. In this article, we’re going to discuss the far-reaching consequences of these data breaches. But first, let’s talk a little about their nature. 

What is a Data Breach?

A data breach is a security incident in which information is illegally accessed. These breaches can potentially hurt businesses and consumers in a number of ways. They are a huge financial expense that can ruin lives, reputations, and careers.

Stories of massive data breaches are frequently popping up these days. This fact shouldn’t be that surprising because technology is rapidly progressing. Most of our information has been moved to the digital world. This makes it easier for hackers to attack and compromise sensitive data. 

Consequences of Data Breaches

Financial Loss

Many businesses fear the immediate financial loses after a big data breach. Numerous financial problems can result depending on the nature of the data breach in question. Companies usually have to deal with the costs of containing the breach, compensating affected clients, coming to terms with a decreased share value and increased security costs. 

Business owners can’t accurately predict how financials will be affected in the events of a data breach but past examples have shown that the monetary loss incurred is massive. In 2018, according to the Cost of Data Breach Study, the average cost of a data breach was $7.91 million.

Damage to Reputation

After the advent of the Internet, the world started to behave like a global village. And in like every village, news travels fast. Those who never even heard about your company will know about a data breach that just rocked your whole organization. 

If the breach in question puts customer data at risk then company reputation will take a massive hit, the likes of which it may never recover from. How? Data breaches are usually followed by negative press, loss of trust, associated identity theft, and a change in overall customer perceptions about the company and its ability to defend itself. 

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Disruption in Business Operations

After a data breach, business operations get severely affected by the investigation and recovery process. Victims of data loss can take a long time to recover from a breach. 

Companies will have to totally shut down operations for a while in order to sort things out and find the reason behind the breach. This will obviously have a trickle-down effect. As long as operations are shut down, work will not get done and customers will soon start looking elsewhere. 

The aftermath is so severe that 60% of small businesses close within six months after a cyber attack. 

Legal Consequences

Data breaches that leak personal information about a client or customer usually result in class-action lawsuits. Pile on the legal fees for these cases and companies stand to face sky-high costs and they may not be ready to pay it. Authorities may also get involved and prevent certain operations until investigations are complete. 

Steps Companies Are Taking to Protect Their Data

Some of the most successful strategies regarding data protection include: 

    • Identifying data flow. Companies who know where their data is coming from and where it’s headed can accurately pinpoint the vulnerabilities. This allows them to make informed decisions with regards to data protection measures and policies.


    • Banning mobile phones at work. This may seem like an extreme measure but it is definitely applicable if required. Since mobile phones are small and inconspicuous, malicious insiders can use them to steal or attack sensitive data. 


    • Only allowing usage of company laptops. Just like mobile phones, malicious insiders can also use personal laptops to steal or attack sensitive data. To counter this threat, companies can choose to ban personal laptops on office premises. 


    • Installing employee monitoring software. To keep track of employee work hours and measure daily productivity, companies are installing time management apps like Staff Timer. In case, of a data breach, the app can help identify the culprit(s).


    • Spreading awareness among employees. Most data breaches come from employee negligence or ignorance. Companies need to educate their employees regarding security measures and cyberattack policies. Employees that regularly come into contact with sensitive data should be under clear guidelines and, if possible, receive formal training. 


    • Using encryption wherever possible. Companies should apply encryption all across the board. From USBs and hard drives to data encryption before the transfer, it’s a must for all companies that are serious about data protection.