One downside of living in a world of fast paced technology is the potential risk of hackers. Virtually every industry, from health insurance to food subscription providers have faced the humiliating and damaging effects of a data breach. Unscrupulous individuals find a weak firewall or some other dubious way of gaining access to secure databases and access sensitive personal information. Accessing, or worse – distributing, personally identifying data poses a huge risk of liability and opens the door to more cyber crimes.
Financial Loss and Liability
Victims of a data breach face the real threat of financial loss if their credit card or financial institution credentials are compromised. Corporations responsible for safeguarding this personal data face severe financial liability in the face of a security breach. They must pay initial damages to repair or replace the breach, cover the cost of credit monitoring for consumer victims, and could be subject to future lawsuits. Consumers are also faced with the task of changing passwords, closing accounts, and countless hours on the phone trying to protect their personal information with a variety of businesses.
Legal Ramifications
Unfortunately, there is no way to accurately predict how far the damage from a data breach could ultimately reach. Consumers could face loss due to compromised passwords that they use for multiple accounts. As the hackers trace or follow users around the internet, they could potentially access multiple accounts. Class action lawsuits against corporations involved in a data breach are just one costly legal concern. High compliance industries, such as financial and healthcare organizations, are subject to regulatory review. An unfavorable decision regarding security protocol in place prior to a breach could lead to steep fines, loss of licensure, and even bankruptcy.
Reputation Management
Perhaps the most damaging impact of a data breach is the long term suffering a company faces due to public perception. Consumers will simply choose not to do business with an organization that cannot value their private information. Sales and stock values often plummet within hours of a news updating that even insinuates the possibility of a security threat. Recruiters even have a difficult time luring new employees due to the shaky reputation. Depending on how serious the breach, companies could face the negative residual fallout for decades.