Business Continuity Still At Risk Years After Data Breach

Business data is one of the most important assets that a company has. It contains anything from the operational system, marketing strategy and even customer information. It helps executives make decisions, adjust customer service to increase customer satisfaction. Data also provides an inkling to what other products and/or services the company can offer to diversify. A secured data means a guaranteed business continuity. Precisely because of this, that data security is a must in today’s digital world.

Data breaches have been observed as early as the advent of computer use of the general population. Threat actors have come to know over time the extrinsic and intrinsic value of data for business and therefore tried to steal them and use them for their gain. For companies, having your data stolen results in a myriad of issues and affects business continuity. Immediate effects are expected and what is worse is that some repercussions are still palpable even up to years post incident. According to IBM, in 2023 alone, the average cost of security breach is at $4.45million. This is about a 15% leap in the last 3 years. The same percentage is the expected annual increase in cost for 2024 and beyond.

Let us go through the long-term after effect of data breach. We will dissect examples that have happened in actual business in the past years. This can help us learn and understand the outcome of the business years after the data breach has occurred.

Business Continuity

Silent Cost of Security Breach to Businesses Continuity

The sample case of The First American Title Insurance Co.

In May 2019, the case of the data security breach in The First American Title Insurance Co. This attack happened because of a weakness in their proprietary application that hackers were able to take advantage of. As a result, 885 million documents of their customers were exposed. These documents contain sensitive information such as social security numbers, tax, licenses and even financial information.  

In line with this, the New York Department of Financial Services or NYDFS imposed a fine on the company, amounting to $1million. The fine, which was announced by the NYDFS in the fall of 2023, was not because they were attacked. The fine was for the company’s failure to impose security features such as effective governance, risk assessment protocols and access controls. It is said that the application of The First American Title Insurance Co. called EaglePro allowed access of customer information without proper authentication.

This case is also one of the bases for state departments to look into and, if needed, amend their cybersecurity regulations. In New York, for example, companies are required to report a breach that involves at least 500 customers and their data. Similarly, the SEC has also released guidelines for cyber security breaches for publicly traded companies.

Long-Term Results of a Data Security Breach

During an attack that exposes business data to threat actors, the company would generally focus on neutralizing the threat. This can be exhausting for the cybersecurity team and the company, in general. Immediate post attack would then move towards business continuity and disaster management. However, after the battle is won and disaster managed, comes all the additional burden resulting from the data security breach. This would include the following: 

• Financial Loss 
• Marred Reputation 
• Accountability from Regulatory Bodies 
• Operation Issues 
• Customer and Investor Challenges

Financial Loss

Most data breaches impact financial status greatly. In 2023, for example, a hospitality and entertainment company lost $100 million plus customer information after an attack. However, this kind of financial loss is just one of the immediate costs related to data breach. Beneath this, a company who had experienced a data breach is expected to spend more on tracing how the threat actor was able to imitate (breach identification and detection). On a similar note, the removal and containment of the breach (either a malware or successful phishing attack), business continuity efforts and customer notification would also entail expenditure.

Aside from these immediate costs, the company can also face an added financial burden eventually. Fines imposed by regulatory bodies and the cost of legal battles are just a couple of examples of this. Just like the case of The First American Title Insurance Co. wherein the breach was in 2019 and yet it was in 2023 that they were ruled to pay the $1 million fine by NYDFS for the said breach. Legal and settlement costs from affected customers, suppliers and other affected parties also pose a heavy burden, cost-wise. In the case of a mobile company, for example, who had to shell out $350 million to settle a class-action lawsuit from their consumers. These customers had their information, which includes name, birthday, home address and even social security numbers, leaked through the improper storage of biometric data by the company.

Marred Reputation

Reputation is a company’s asset. Having a history of data breach will ruin any business’ name. Customers would lose trust in the company when they display the inability to protect their information. This decreases the number of new businesses from new customers and will also impact the retention of old patrons.

Although this can be rebuilt, time and effort in doing this would be immense. The company must be able to communicate to their consumers and stakeholders that they are taking cybersecurity very seriously and that another breach would be unlikely. This will involve evidently and palpably improved cyber security measures, multiple PR campaigns and promotions, among others.

Accountability from Regulatory Bodies

Following multiple cases of data breach from different companies in various industries, government bodies have come up with different regulatory bodies. This is in an attempt to protect business, stakeholders and consumer interests against threat actors.

In line with this, regulatory bodies hold businesses accountable when it comes to their customers’ data. Although 100% data protection is impossible, businesses must strictly meet at least minimum cyber security protocols. Therefore, in case of a breach, all the policies, protocols and security system will be scrutinized by the government agency concerned. If a business falls short of the minimum, fines and requirement compliance will be issued. This may mean a need for trusted IT professionals to help you with disaster management, business continuity and cybersecurity if the company does not have enough skilled manpower in the IT department. This also means that the business will be watched like a hawk by the regulating body for some time until consistent improvements are established.

Operational and Business Continuity Issues

The first effect of having a data breach in your business would be a state of panic and disruption. This means increased stress but decreased productivity as everyone is most likely confused and dumbfounded. Then follows a state where most of the company’s resources, like workforce and system, would be focused on the identification and control of the breach. Then refocused on strengthening cyber security features. This results, therefore, in decreased output from other departments and other core business functions.

The impact of the breach will flow through the entire company, including those who are far from the IT department in function or logistics. The decreased focus on core business functions, decreased labor and decreased morale will impact growth and adaptability. This can even affect customer support and services. Reverting back to normalcy may be a challenge for some time following the breach.

Business Continuity

Customer and Investor Challenges

Businesses with a reported history of data breach will lead to customer distrust. This would also lead to decreased retention of their established customer base. Understandably so, this is because customers would not want to give their personal information to an entity who may not be able to protect it and lead to leaks to various threat actors.

Similarly, for publicly listed companies, investors would also shy away from companies with data breach history. This is because risks would usually be higher in these businesses considering the possible financial loss and data spillage. Thereby affecting market competitiveness and hindering business growth. 

Invest in Proper Cybersecurity as well as Strong and Stable Business Continuity System

The resulting weight of data breach is a very heavy burden for business owners. Lingering effects can still be palpable even after years of the incident. Therefore, it would be wise to think of multiple steps ahead to prevent such a disaster from occurring in your own company. This does not only mean cybersecurity protection but cyber resilience.

This security plan should include: 

• breach prevention 
• protection against possible attack 
• quicker resolution in case of an attack 
• business continuity despite the attack 

Although mostly viewed as an expenditure, investing in a very good cyber resiliency plan and managed IT services, will prove to be an asset instead overall. An improved cyber resiliency posture is a strategic imperative for any business to succeed. 

Reach out to Cybersecurity, Business Continuity and Disaster Management Professionals

Threat actors have a million and one way to try breaching any security protocol. This includes tools like malware bots, phishing, deep fakes, among others. They can try penetrating in any and all ways they can by exposing vulnerabilities in your system.

Get in touch with experienced IT professionals who can diagnose your vulnerabilities and offer solid solutions. We have been doing this to our clients for years and they are always stepping ahead of these cyber criminals. You can get your personalized cybersecurity and management plan too!

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