If you are an organisation that processes the personal data of UK residents, you are obligated under data protection law to take all the necessary steps to protect said data. If you fail to protect this data, not only will it have an effect on the individual whose data was breached, but it could also impact your organisation. This guide aims to explain the potential data breach impact on businesses. We’ll look at some specific ways that a data breach can harm a company and also at proactive steps that you, as a company, can take to repair the damage and prevent cyber threats from happening again.
Data breaches are serious problems that can impact companies, large and small, all around the world. With ever more sophisticated tactics to infiltrate and steal personal data, it’s never been more important to know the risks to your business.
If you’d like to access free information about seeking compensation for the harmful impact of a personal data breach, speak to our advisors. We work closely with a team of data breach solicitors who are experts at guiding people through a compensation claim against a company at fault for a data breach.
- Contact us online, and if you are eligible to seek compensation.
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Jump To A Section
- What Is The Potential Data Breach Impact On Businesses?
- How Can You Prevent A Data Breach?
- What Should You Do If You’ve Suffered A Data Breach?
- Learn More About Data Breaches
What Is The Potential Data Breach Impact On Businesses?
The impact of a data breach on businesses can be devastating. If information is accessed and stolen, the repercussions to the staff and business operations can take weeks, months and even years to overcome.
In addition to dealing with the constant threat of cyber attacks, companies have normal, everyday data obligations. Personal data (any information that reveals your identity) must be safeguarded as per the Data Protection Act 2018 (DPA) and the UK General Data Protection Regulation (UK GDPR). These laws require those who process personal data to comply with certain rigorous processing standards.
Also, the company risks exposure to potentially huge fines from the independent watchdog of data processing rights called the Information Commissioners Office (ICO) if they fail to protect data entrusted to them. Whether the cause of the data breach was accidental human error or deliberate, if wrongful conduct with data was the root cause of the breach, the company can be fined.
Below, we set out some examples of the potential data breach impacts on buisnesses.
Reputational Damage
Customers are considerably less likely to trust a company that has suffered a serious data breach. They can be forgiven for being hesitant to place their payment details and personal information with the company. Regardless of whether that company tried its hardest to comply fully with data protection laws, reputational damage can be almost impossible to reverse.
As word of the data breach gets out, some customers may leave. Online reviews can also worsen the reputational harm. The expense of hiring PR firms and launching publicity campaigns to rectify their public perception is both expensive and time-consuming. Making it harder for small businesses and medium-sized companies to bounce back from this reputational damage and restore consumer trust.
Sensitive Data Loss
Ordinary personal data such as names, addresses, email addresses and bank details are protected. Particular scrutiny applies to how certain sensitive information is used. The ICO describe specific types of information as special category data. This is based on its potential to cause the data subject a greater level of harm if compromised and there for requires a greater deal of protection. Special category data includes:
- Medical records and health information.
- Political and philosophical beliefs.
- Trade union memberships and affiliations.
- Sexual orientation.
- Religious and philosophical beliefs.
- Biometric data.
- Data concerning dependants.
- Information about criminal records, convictions and prosecutions.
Depending on the precise nature of the business or organisation, it may be required to store and process personal information such as this. Larger companies routinely need to keep a wide swath of sensitive customer information about employees and customers.
The consequence of this type of personal data being breached can not only be greatly impactful for the individual, but it could also harm you as a business. It may lead to existing customers no longer trusting you and your services and, therefore, no longer wanting to use you.
Operational Downtime
The impact on the business is not just the loss of new or existing customers. In the immediate aftermath of a data breach, there are direct financial consequences to the company, such as replacing software and installing new IT defences. Then there is potentially the cost of stolen funds, the potential loss of intellectual property and damage done to digital assets.
In addition to these emergency actions, staff may be required to cease normal operations and focus instead on trying to contain the data breach problem. Whole IT departments might be required to address the data attack damage. In some cases, an external forensic agency might be needed to come in. The expense and disruption created to normal trading can last for weeks while this agency tries to locate the source of the data breach, establish its impact and restore data security.
Furthermore, unless corrective measures are put in place immediately to prevent future data breaches, it can be possible to suffer ongoing harm to the organisation. Time will again be needed to re-secure data, change passwords, install better IT defences, make security investments and identify these vulnerabilities.
Legal Implications
Organisations must show how they comply with the data protection laws we mentioned above. Part of this compliance is to show that all necessary steps were taken in order to protect the personal data of staff and customers, whether this data was in digital or paperwork formats.
Also, staff who work with personal data need to be correctly trained about the DPA and UK GDPR standards of data processing. This entails showing that they understand their obligation not to destroy, alter, lose, duplicate or share personal data in unauthorised ways or without a lawful basis.
Another legal compliance can be ensuring that staff in the company only have access to the personal data that they need in order to perform their tasks. Furthermore, an awareness of data fraud and online deception is crucial in helping staff protect information that belongs to other people. With ever more sophisticated phishing and hacking tactics, it’s vital that staff feel confident in what they’re doing.
Failure to adhere to data laws can expose the company to legal implications that are not restricted to ICO fines. Potentially, every impacted data subject could have a compensation claim against the company if they can prove the breach of data harmed them. The costs of paying legal fees and damages to all these people can be costly.
If your personal data has been impacted by an organisation, such as the one you work for, we could help you with claiming data breach compensation. Contact our advisors today to learn more,
How Can You Prevent A Data Breach?
Now that we have shared the potential data breach impacts on businesses, you may also be wondering how to prevent a data breach from occurring.
It’s essential to know what actions can be taken to prevent a data breach prior to or after one has resulted in stolen information. The following can help:
- Check available CCTV footage to see if anyone was able to gain access to the premises and the data. Close off this vulnerability.
- Regularly update passwords and authentication steps.
- Ensure staff are regularly trained and up to date on data protection measures.
- Apply locks to cabinets and areas that contain personal data paperwork.
- Increase IT security investments to prevent cyber threats and the potential data breach impact on businesses in the future.
What Should You Do If You’ve Suffered A Data Breach?
There are numerous actions open you after a data breach has impacted you or your company:
- Organisations that discover a data breach that might impact the rights and freedoms of their customers, staff or the public have a duty to report the breach to the ICO. This should be done no later than 72 hours after discovery. Keep a copy of all correspondence.
- You must inform the individuals whose personal data was affected in the breach without undue delay if you believe their rights and freedoms are at risk. This needs to include exactly what information was breached.
- Implement necessary safety measures to prevent a similar data breach from occurring again, e.g. updating cybersecurity measures and retraining staff on data protection.
If you have been informed that an organisation has breached your personal data, either as a customer or a staff member, you may also wish to seek advice on what steps you could take next.
Contact our advisory team today to see how one of the data breach solicitors on our panel could help you after your personal data has been breached:
- Contact us online, and if you are eligible to seek compensation.
- Please call our team for free on 0208 050 3051
- Or ask us anything via the live support below.
Learn More About Data Breaches
The following resources provide more information on data breaches and how to claim for them:
- Read about how to sue a company for breach of data protection here.
- Steps to take if your password has been part of a data breach.
- General information on the data breach claims process is available here.
Additionally, you can check out these external resources:
- Information on the ICO enforcement and regulatory fines for data breaches.
- As well as specific guidance about data security for businesses from the ICO.
- Read some Government information on the general data protection regulation rules.
In conclusion, thanks for your interest in this guide about data breach impact on businesses.