What Happens When There is a Data Breach?

A security breach is an incident where information has been accessed without authorization. Technically, there is a distinction between a security breach and a data breach. A security breach is effectively a break-in, whereas a data breach is defined as the cybercriminal getting away with information.  

The number of breaches and records exposed in 2020 in USA has increased to a staggering 36 billion according to the latest research from Security Magazine in the United States “There were 2,935 publicly reported breaches in the first three quarters of 2020, with the three months of Q3 adding an additional 8.3 billion records to what was already the “worst year on record.” 

Data breaches, especially in the financial, health, and insurance industries, are delicate given the nature of data. Leak, loss, or ransom of data entails not only the loss of data, but hard reputational and financial consequences 

There are several types of Security Breaches 

• Exploits:  attack a system vulnerability, such as an out-of-date operating system. In this case, the targets are Legacy systems that have not been updated. It happens for example in businesses where outdated versions of Microsoft Windows that are no longer supported are being used. These are particularly vulnerable to exploits. 
• Password Management: Weak passwords that can be cracked or guessed. 
• Malware attacks: phishing emails that can be used as gateway into your company.  
• Downloads:  malware that is delivered through a compromised file or website.  

• Social engineering: Confusing people in order to gain access has proven to work in order to access companies’ databases. 

The most common results of a Data Breach and security terms: 

In the insurance industry, some of the most common results of a breach in security, include: 
 

1. Reputational damage 
   Since your data and security are sensitive subjects, the fact that you have been breached tells customers that you are not paying due attention to something. While that may not be true, it looks that way on the outside. So, since the overwhelming majority of people would not do business with a company that had been breached, especially if it failed to protect its customers’ data, loss of customer and stakeholder trust can be the most harmful impact of cybercrime.
2. Financial losses
   Cybercrime costs small business disproportionately more than big businesses when adjusted for organizational size. Small businesses spend an average of $38,000 to recover from a single data breach in direct expenses alone according to the experts at, Kaspersky Lab, on their piece ‘Damage Control: The Cost of Security Breaches‘. A casual stance on security could quite easily put you out of business.
    
3. Below-the-surface costs
   There are several intangible costs that can continue to affect businesses long after the event itself. Small organizations that already struggle to manage cash flow may face crippling rises in insurance premiums as a result of the attack. 

What do you do after a Data breach? 

Each organization is unique in terms of the impact of a breach. Impact depends on the timing, duration, and the industry in which the breached company operates. There are several common consequences to an attack. They all depend on the type of data that was lost, leaked, or affected by the breach:  

• Notification expenses: Required in several states, these are the costs you incur after an attack has happened. You are obligated to notify the customers involved in the data breach, and this can be very costly if you have a large database.   
• Regulatory fines: These can be incurred in cases where you were not compliant at the time of the attack and the losses happen as a result.  

• Class action lawsuits: More likely in the case of a large-scale data breaches. Lawsuits are usually filed on behalf of customers whose data and privacy were compromised. 

In conclusion, security is not just an IT problem – it is organization wide. Adopting a comprehensive security strategy today can help you avoid headaches tomorrow.  

An opportunity to learn more on how to protect your Data Security

To learn how to create an effective data security plan, sign up for the upcoming SmartCompliance webinar: Lock-it-or-lose-it Webinar. The webinar will be hosted by James Benham, CEO of SmartCompliance and insurance technology disruptor from Bryan, Texas. 

It will take place on April 28th at 2 PM CST, and if you can’t attend, sign up anyway! We will send you a free recording of the webinar!