As more companies conduct operations online, fraudsters also see more opportunities to carry out their malicious activities. From phishing and malware attacks to zero-day exploits and identity theft, bad actors are taking advantage of the fact that they can use their tech skills to gain access to business data.
For instance, figures from Q2 say the U.S. retail e-commerce industry posted record-breaking sales of $222 billion. But similarly, digital fraud cases were up by 25.07% from January to April 2021.
The prevalence of online scams calls for businesses to protect customer data through heightened general awareness and measures on IT security. This is especially true if your organization is within the financial, healthcare, or telecommunications sector.
Without robust identity and access management solutions, you risk facing the consequences of a data breach. Get the latest data and actionable strategies to implement in your fight against identity fraud and other forms of digital attacks from our infographic below.
The Costly and Dangerous Impact of Data Breaches
Data breaches are one of the unfortunate consequences of the business world becoming digital. Unscrupulous individuals or parties lurk on the web, ready to pounce on their next cyber fraud victim. And with fraudsters becoming more and more skilled in stealing business and consumer data, companies face a huge challenge in thwarting potential attacks.
From January to June 2021 alone, 1,767 cases of data breaches were disclosed to the public, a security magazine reports. The total number of compromised records is said to reach 18.8 billion. That’s just one of the many statistics pointing to the rise of security attacks on businesses in the digital space. The rest of the figures couldn’t be more alarming:
- Numerous global financial services are the subject of cyber fraud attempts, the cases for which have risen by 149%.
- Only 16% of companies consider themselves well-equipped in case of a cyberattack.
Ransomware has become an increasingly serious problem for organizations. As of 2021, it’s estimated that the ransomware industry is worth $14 billion. (Packetlabs)
Consequences of a Data Breach
Cyberattacks have devastating effects, not only threatening business stability but also incurring costs that may only get worse through the years. Below, we tackle what those harmful effects are.
1: Significant financial loss
According to IBM, a data breach in 2021 costs an average of $4.24 million. However, that may be a conservative estimate, given how financial losses due to data breaches are a combination of direct and indirect costs that companies have to deal with.
Cybercriminals can resort to blackmail schemes, forcing businesses to pay huge sums of money in exchange for recovering their data. Customers may lose their confidence in your company, prompting them to abandon your business. It’s also possible for your employees to feel unsure of what to do after a data breach, which can lead to poorer service, poor quality products, or worse, a PR nightmare where someone leaks information they shouldn’t.
2: Operational constraints
Packetlabs reports that data breaches from 2020 took companies 239 days on average to detect and contain.The financial impact of a data breach becomes greater the longer it takes for a company to find out where or how it happened.
Once your IT team discovers your system has been breached, they will need to perform a thorough assessment of the damage. Since this process can last for several days or weeks, you should be prepared to halt your business operations until your system is clear and good to go again.
3: Legal responsibilities
When you collect and store customers’ names, email addresses, and other personal information, you automatically become responsible for protecting their data. You must secure your system, network, and infrastructure each time data is collected, or you may find yourself in a legal battle with regulators or a class-action lawsuit filed by your customers.
Should a breach happen, you should report it to your customers, conduct cyber forensics, and work with your attorney to determine if your business will be subject to fines.
4: Tarnished brand reputation
Customers submitting their information or clicking “Agree” when transacting with your business can only mean one thing: they’re giving you their trust and expecting you to do your part in protecting their information.
The damage of a data breach can last for years after you’ve experienced one, with lower customer acquisition rates, lower retention rates, and poorer satisfaction ratings of those customers you do keep. These costs can add up considerably in terms of lost opportunities and lost revenue.
5: Loss of data access
Data breaches typically involve compromised data, whether that means data has fallen into the wrong hands or was destroyed. Whatever the case may be, data access can be significantly affected. Imagine if hospital records, such as data about donors, get exposed in a data breach. That can seriously hamper the patients’ chances of receiving timely and quality healthcare that can save their lives.
How to Prevent Cyberattacks
Cyberattacks, such as identity theft, can be prevented and mitigated by taking these proactive security measures:
- Encourage strong password practices (or better yet, get rid of them altogether). A good rule of thumb is to have end-users of your system create unique and original login passwords for all business-related software and hardware. Default passwords need to be changed, as they’re easy to crack. A passwordless system removes the need for users to remember passwords, or to have to maintain secure ones.
- Apply multi-factor authentication whenever possible. Whether it’s a one-time code or biometric data, MFA is designed to make it more difficult for fraudsters to obtain all the pieces of information needed to access your system. Passwordless authentication methods that also utilize MFA are among the most secure on the market today.
- Create data backups with encryption. Encrypted data backups have several advantages, from preventing data loss to avoiding system downtime and facilitating data recovery efforts.
- Implement regular testing of security systems. You won’t know how well your security system can address a cyberattack if you fail to regularly audit it for security gaps, software updates, viruses, permissions, and the like.
- Conduct employee training on security awareness. Training programs for employees are an excellent way to promote a security-conscious culture within the organization. Schedule the sessions regularly, focusing on how to identify security threats and how to minimize the risks they pose.
Invest in identity and access management solutions. Specialized software in identity and access management effectively manages the sharing or transfer of business data outside your network. With it, you can implement strict internal controls or limit what information users can access, share, or transfer.
Be on the Safe Side
Business entities are among those that fall easy prey to security attacks, including data breaches and identity theft. This is especially true for financial institutions, telcos, and healthcare companies, since these organizations handle sensitive data regularly. To mitigate the risk of a crippling cyberattack, conducting transactions digitally should be done with utmost care.
Always remember that it’s part of your legal and moral responsibility to safeguard your customers. Ensuring that their data is kept far from the reach of fraudsters will ensure their satisfaction with your services while maintaining their wellbeing.
Got questions on how to prevent data breaches? Consult our team at Q5id for quality solutions in a security system for your business.
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