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Data Breach: The Importance of Protecting Your Customer Data - Financial Services Firms

Posted by Keith Shaffer on Nov 8, 2018 1:47:37 PM

In today’s digital world, customer data is one of the most valuable currencies. Unfortunately, that makes it an incredibly attractive target for hackers, phishers, and other cyber criminals. In fact, an estimated 158,727 pieces of customer data are stolen every single hour.

It’s not just cyber criminals that leave you vulnerable to data breaches, though. Simple human error can lead to the unintentional release of customer data, and the consequences for your business can be equally devastating.

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Forbes reports, "Globally, the impact of a data breach on an organization averages $3.86 million, though more serious 'mega breaches' can cost hundreds of millions of dollars. IBM's 2018 Cost of a Data Breach study was formulated through interviews with more than 2,200 IT, data protection and compliance professionals from 477 companies and it provides an interesting insight into one of the most serious problems facing companies today.

The potential cost of an incident depends on several factors with the financial impact rising in line with the number of records stolen. On average, each record costs $148 and a breach of 1 million records costs $40 million while a breach of 50 million costs $350 million. The research also found that the efficiency in identifying an incident and the speed of the response has a huge impact on its overall cost. On average, it took companies 197 days to identify a data breach and 69 days to contain it."

 

Legal implications

At present, federal legislation governing data protection tends to be sector-specific, while state legislation focuses on protecting the data of individual consumers.

It can be hard to keep track of which regulations you need to adhere to, but the basic principle is that you need to take reasonable measures to protect personally identifiable or sensitive information about your customers - think names, addresses, social security numbers, or credit card information, for example.

Depending on your state and sector, you might be required to do any number of the following:

  • Encrypt personally identifiable informationdata breach_data encryption_Fairdinkum consulting
  • Destroy sensitive information in a way that makes it unrecoverable
  • Specify exactly how you plan to use the information you collect
  • Restrict the sale of information for marketing purposes
  • Publish detailed data security plans
  • Notify affected customers of data breaches within a set time frame

If you fail to meet your obligations and a data breach occurs, you may face heavy fines and be held liable for damages suffered by your customers. In some sectors and/or jurisdictions, you may even lose your license to conduct business altogether.

Public relations damage

Research has found that in the event of a cyber attack, as many as 60% of your customers consider leaving, and around a third actually do, even if they weren’t personally affected.

It makes sense — your customers are trusting you with their most personal of data, and a breach can seriously shake their confidence in your ability to keep that data (and them) safe. Very few businesses can survive the loss of one third of their customers, and chances are yours is one of them.

 financial loss_data breach_Fairdinkum consulting

Financial loss

With legal consequences, public relations damage, and customer decline comes financial loss. Whether you’re paying steep fines or losing out on sales, your business takes a huge monetary hit from a data breach. The cost for an average small business is approaching $150 million, which again, most businesses simply can’t afford.

statistic_id267132_ic3_-total-damage-caused-by-reported-cyber-crime-2001-2017

Time to call in the experts?

Even the best-protected and most vigilant companies can fall victim to a data breach, so it’s important to take a proactive approach to keeping your customer data safe and secure. Ultimately, the best way to do this is to get a helping hand from the professionals.

At Fairdinkum, we help businesses like yours to secure their customer data, protect their reputation, and avoid costly legal and financial consequences. You can download Fairdinkum’s free Security Audit Checklist to help you to find your weak spots before cyber attackers do, or contact us now for a free, no-obligation consultation.

financial services audit checklist Fairdinkum consulting

 

You may want to read 5 Things Financial Firms Need To Know About Cyber Security.

 

Topics: Data Breach, Data Protection