Data Security Breaches
When it comes to a data security breach, it isn’t as much a matter of if it will happen as when. Technology is a double-edged sword. The technology your company relies on to conduct its business can also significantly increase its vulnerability to cyber security threats—any of which can result in significant out-of-pocket and reputational costs that can devastate your bottom line.
How Prepared Is Your Company for:
• Identity theft resulting from lost or stolen Social Security numbers, credit cards, driver’s licenses or financial information?
• Hacker malfeasance resulting in the theft of confidential information or costly e-vandalism?
• A lawsuit stemming from a security failure or technology error or an omission that results in damages to customers?
• A lawsuit alleging intellectual property, trademark or copyright infringement?
• A lawsuit alleging invasion of privacy, libel, slander, defamation or product disparagement involving information residing as email; on laptops, PDAs, flash drives or servers; or on the Internet?
• An e-business interruption resulting from a security failure or Internet virus?
• A cyber extortion threat?
• Costs related to privacy notification, crisis management and disaster recovery?
What Every Business Needs to Know About Data Breaches:
• The culprit is often someone close to your business. A surprisingly large proportion of data breaches are carried out by insiders—over half by some estimates—or by business partners. A trusted employee could be the offender.
• The perpetrator could live halfway around the globe. To vandalize your building, a criminal must be on site, but a hacker can operate from anywhere in the world. Organized cyber crime rings operate worldwide, 24/7.
• Size doesn’t matter. Half of all companies that suffer data breaches have fewer than 1,000 employees.
• Any company can be hit. Cyber criminals don’t care where they steal private information from; retailers, health care institutions, manufacturers, professional service providers, media and entertainment companies and financial institutions are all likely to be targeted.
• A breach can result from a simple mistake. An employee might misplace a laptop, Blackberry or computer tapes or leave these in an unsecured location, such as an unlocked car.
• Cyber risk is steadily increasing. Data breaches affect hundreds of millions of records each year and reports of breaches continue to rise at a dramatic rate.
The Costs of Data Security Breaches Can Be Significant:
• Many states require companies to notify all of their customers if a breach is even suspected and to take necessary steps to correct the situation—a cost estimated at up to $30 or more per customer. Multiply these costs times your company’s total number of customers, and you’ll see how quickly they can add up.
• Often overlooked is the potential loss of confidence in your organization by your customers and potential customers when a security breach occurs. The fact is that a cyber security failure can significantly impact shareholder value, as well as corporate stability, reputation and financial performance.
• Until a data breach occurs, there’s really no way to know the extent of the leak or the financial devastation it can cause.
Unfortunately, businesses often seriously underestimate their data security breach risks. Even if your business uses state-of-the-art security controls, your customers, shareholders and corporate assets are still at risk of a determined criminal element that can bring operations to a grinding halt. When you stack up the potential costs brought on by a data security breach, risk mitigation—through insurance coverage and loss prevention efforts—is more than a smart investment. It’s business-critical.
This content originally appeared on the Risk Conversation website, a resource from Chubb.