Information constitutes the most vital resource for either an individual or a corporate entity. Whether private, financial or any sensitive business information, looking after these valuables becomes challenging. Nonetheless, when companies do not provide sufficient data protection services, such entities are cloaked by various risks that come with severe consequences. The risks due to the lack of adequate data protection range from net losses to being followed up legally.
This article identifies the principal dangers of inadequate data protection and explains the need for strong data protection services for all organizations.
Data Breaches and Cyber Attacks
People talk a lot about the risks of having very poor data protection services. However, one that stands out is the risk of data breaches or cyber-attacks. The anatomy of congestion remains the same and hinders every organization with poor security systems. A lack of basic encryption standards, weak access controls or appliance protection, and even the presence of old and outdated systems invite the efforts of cybercriminals to breach secure environments and perform data exfiltration.
A privacy data breach can reveal private details including customers’ names, addresses, credit card details, and SSNs. For the corporates, trade secrets and sensitive company data are equally susceptible. The monetary implications of a data breach can be overwhelming such as the defense costs, damages to be paid to victims, and penalties imposed by the authorities.
Moreover, a data breach may devastate the reputation of the affected organization. Such organizations may find it hard to regain their customers’ trust especially if the businesses have been carelessly exposing their customers’ private data. This in turn leads to a loss of revenues and a tarnished brand.
Regulatory Non-compliance
Due to the growing concern for confidentiality and data security, many countries have put in place strict regulations that require organizations to protect sensitive information. For example, the General Data Protection Regulation (GDPR), applicable to all countries of the European Union, and the California Consumer Privacy Act (CCPA) have placed significant limitations on the processes and methods used by businesses to gather, maintain, and secure the private information of individuals.
Lack of adequate data safeguard services can lead to an inability to comply with these laws, hence incurring losses in both legal and financial aspects. Quite often, the regulatory penalties for falling short of compliance are very high – even running into several hundreds of thousands of dollars.
For instance, GDPR provides that fines can reach €20 million or 4% of the yearly world turnover of the business, whichever exceeds the other. In addition, organizations that are determined to be in breach of the law risk being sued by those affected, or even by many individuals, in the form of class action, which intensifies the risks, legally and financially.
Loss of Data Integrity
Data integrity describes the degree of accuracy, consistency, and correctness of data over a certain period. When a company lacks appropriate data protection services, there is bound to be a data integrity issue that would cause mistrust in its data. This can be due to unapproved users gaining access to data, accidental loss of data, or intentional tampering with data.
The consequences associated with data integrity breaches cannot be overemphasized, especially, to organizations where data accuracy is paramount in making decisions. For example, in particular industries such as finance, health care, and the provision of services, incorrect or even inadequate information can result in wrong decisions that may lead to drained finances and in extreme cases loss of life. Furthermore, the revenues earned by the business can also be driven down due to the compromises of the data in use affecting business processes as well as customer relations.
Intellectual Property Theft
For many firms, especially those engaged in technology, pharmaceuticals, and even manufacturing, intellectual property (IP) is one of the most expensive resources. IP theft is when competitors or malefactors access and use confidential information such as patents, blueprints, recipes, and business operations without permission.
Lack of data safeguard measures will expose a business’s innovative ideas to threat hence causing an extreme downward ineptness over competition. If trade secrets are disclosed to the competition, then that information can be used to produce the same or similar products and ultimately reduce the sales volume of that business. Furthermore, exposing or losing proprietary information such as trade secrets or advanced technology can stifle growth and creative ideas encompassed in the business’s products and services.
Operational Disruption
Insufficient protection of data is a threat in its own right because it can bring about the interruption of services which is harmful to the continuity of operations. One significant example of this may be data protection services inadequacy resulting in a raft of ransomware attacks. These are attacks where the inherent data within a company is encrypted and a ransom is demanded for the decryption code.
In the event data is held hostage or tampered сorrupted the business faces a high possibility of moving around without performing any productive activities, hence lost revenue. There are worse cases where some businesses have to cough up the ransom to access their data which ends up incurring greater losses. Still, that would not prevent the unfortunate possibility of the data being secure even after the ransom was paid, which underscores the importance of data protection policies for enterprises.
Loss of Customer Trust
When patronizing any business, customers share their sensitive information trusting that it is kept safe and used properly. However, the lack of proper data protection services may lead to instances of information exposure where customers’ details are compromised and this causes mistrust.
Once customers doubt a company’s ability to protect their information from third-party threats, they tend to switch to a more reliable company. This little issue can lead to the tarnishing of a business’s name and image for years to come. Adverse media coverage about a security breach can prevent customers, business partners, and shareholders from approaching the company again and can cause a loss of revenue and market positioning.
Financial Losses
The financial repercussions inflicted by poor data protection services may prove to be huge. Businesses can incur direct losses resulting from penalties, legal actions, or compensations made to the affected people. In addition to that, the expenses related to resolving a data breach due to investigations, forensic services, legal advice, and informing customers can be considerable.
There are also potential indirect financial losses that can be caused by interruptions in service, missed business opportunities, and loss of reputation. Insurance coverage for damages brought about by poor data protection practices is a long-term business risk that can devastate companies particularly SMEs which are often ill-equipped to withstand the impact of a serious data breach.
Increased Risk of Insider Threats
Insufficient data security measures do not usually mitigate the dangers posed by insider threats. This term refers to employees, contractors, or business associates who for one reason or another leak sensitive information. In the absence of adequate access restrictions, surveillance, and data encryption, businesses are at risk of losing information stored in their in-house systems.
Because the offenders may have authorized access to the organization’s information, crimes committed by insiders can be very hard to trace. Still, these individuals can take advantage of the lack of effective data security to steal compromising information.
Key Takeaway
Inadequate data protection services carry a wide range of risks that can be harmful to businesses, regardless of their size. Among such risks are data breaches, non-compliant with regulations, losing customers, and incurring costs, which makes poor data protection impossible to wish away.
Nowadays, when data rules the world, a business cannot afford not to emphasize data protection, by putting up strong barricades them invest in encryption and updating their systems regularly while adhering to the relevant governing laws. In this way, they can protect their treasure in the form of information, and their name, and achieve continuity in the business.