What Happens When a Company Experiences a Data Breach?
What Happens When a Company Experiences a Data Breach?Dec 8 2022
Over the past decade, we’ve seen an influx in data breaches. From high-profile cases like the 2017 Equifax breach that exposed the personal information of 147 million people to more recent cases like the 2019 Facebook breach that affected 533 million users, and now the Optus breach and Medicare breach. It’s clear that no company is safe from a data breach. But why do they occur? And how to avoid them? Let’s take a closer look.
Why Do Data Breaches Occur?
A data breach is the intentional or accidental release of secure or confidential information, including, but not limited to, personally identifiable information, protected health information, payment card information, trade secrets, or intellectual property. Once this information is released, it can be used to commit identity theft, fraud, and other crimes.
All it takes is one weak point in an organization’s security to create an opportunity for attackers. Those who intentionally breach an organization’s security can have various motives for obtaining this sensitive information – it could be for financial gain through fraud or identity theft, political reasons, personal gain, or even just for fun.
Some of the most common causes of data breaches in 2022 include:
- Hacking (45%): Hackers can gain access to systems through a variety of methods, including form jacking code, viruses, Trojan horses, and denial-of-service attacks to steal sensitive information or wreak havoc by deleting critical files.
- Malicious Insiders (30%): Malicious insiders are individuals who have legitimate access to an organization’s systems but misuse that access for their gain.
- Human Error (22%): Employees are often the weak link when it comes to data security. If they’re not properly trained on how to handle and protect sensitive information, they could inadvertently put the company at risk.
- Phishing Scams (22%): In a phishing scam, an attacker poses as a trusted individual or organization to trick victims into giving up sensitive information.
- Physical Actions (4%): This includes physical theft of sensitive information, hard drives, etc.
- Security Vulnerabilities: These vulnerabilities may be unknown weaknesses that are exploited by hackers or they may be known but unpatched vulnerabilities that could have been easily fixed if the company had taken proper care of its systems. A glaring example is the Equifax breach.
How Do Data Breaches Impact the Organization and Its Clientele?
Some of the world’s most recognizable brands have had their customer data compromised in recent years, including Yahoo!, eBay, Target, and Home Depot.
In September 2022, Optus — one of Australia’s largest telecommunications companies—suffered a data breach that exposed the personal details of approximately 9.8 million customers. The leaked information included names, dates of birth, addresses, and account numbers.
In 2009, the social media website RockYou experienced a data breach that exposed the personal information of over 32 million users. The breach occurred when a hacker gained access to RockYou’s database through an SQL injection attack and was able to download a file containing the unencrypted passwords of all RockYou users. This type of sensitive information can be used for identity theft and other fraudulent activities.
If you are concerned that your email address or phone number may have been leaked in any recent breach, head over to the HIBP website.
While each case is unique, some common themes emerge when looking at how these organizations have been impacted by their respective breaches.
Organizational Impacts of a Data Breach
Data breaches can have a crippling impact on the organization beyond the initial loss of sensitive data, including:
- Reputational Damage: Optus’s data breach not only resulted in the exposure of customer information but also in serious damage to the company’s reputation. Once customers lose trust in an organization’s ability to protect their sensitive information, it can be very difficult for that organization to win it back.
- Legal Penalties and Financial Loss: In some cases, organizations may be fined for failing to adequately protect customer information. In Optus’s case, the Office of the Australian Information Commissioner (OAIC) reported that if serious breaches were found during the investigation, Optus could face a penalty of AU$2.2 million.
Customer Impacts of a Data Breach
If criminals gain access to your personal information through a data breach (as they did in the Optus incident), they can use that information to commit fraud or steal your identity. This can cause victims significant financial hardship and emotional distress.
How to Prevent Data Breaches?
According to IBM Security, the average cost of a data breach is $4.35 million. Preventing a data breach from happening in the first place with effective measures is the best way to handle it. Here are four key practices to implement:
- Ensure Employee Training: Your employees are your front line of defense when it comes to data security. They need to be trained in best practices such as not sharing passwords, not opening email attachments from unknown senders, and not clicking on links in phishing emails.
- Invest in Network Security Intelligence Tools: VPNs encrypt data and provide a secure connection between devices, making it more difficult for hackers to intercept data in transit. VPN protection can also help organizations restrict access to sensitive information, ensuring that only authorized personnel can view or edit it.
- Have an Incident Response Plan: A well-documented Incident Response Plan will help you contain the damage caused by a breach and get your business back up and running as quickly as possible.
- Engage Penetration Testing Services: Penetration testing simulates a real-world attack on your systems and allows you to identify vulnerabilities used by hackers to steal information to be fixed before a real attack occurs.
How Does Penetration Testing Work?
Penetration testing is conducted by ethical hackers who have been hired by a company to test its security defenses. This external team simulates attacks on a company’s systems to identify vulnerabilities that could potentially be exploited by hackers.
Penetration testing is important because it can help to prevent data breaches from occurring. By identifying vulnerabilities, companies can patch them before hackers have a chance to exploit them. In many cases, data breaches occur because hackers find and exploit known vulnerabilities that have not been patched.
Penetration testing provides companies with an opportunity to assess their security defenses against real-world threats. Too often, companies rely on perimeter defenses such as firewalls and intrusion detection systems without ever testing how well these defenses work. As a result, they may be lulled into a false sense of security and be unprepared for an actual attack. Penetration tests help ensure that companies are prepared for attacks by simulating real-world scenarios and identifying weaknesses in their defenses.
No company is immune to the risk of a data breach, but by taking preventative measures and regularly assessing their potential risks, they can mitigate the damage caused by these incidents. Penetration testing is an essential part of any data security strategy, as it helps identify vulnerabilities which are commonly exploited by attackers and used to download databases.. By investing in their data security, companies can protect both themselves and their customers from the devastating consequences of a data breach.
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