It would be difficult to find a business owner, manager or executive today who does not believe that data protection is important. There have simply been too many data breaches in the news for these leaders to remain unaware of the threats facing their organizations.
Yet while the general need to protect data is well-understood, many continue to underestimate the possible repercussions that may follow a breach, and therefore do not take sufficient steps to protect their sensitive information.
Here are three of the most significant long-term consequences that firms may have to grapple with following a data breach, and which emphasize the importance of preventative tools, such as secure managed file transfer (MFT) solutions.
1. Competitive ability
One of the main reasons why data breaches happen in the first place is because cybercriminals are eager to steal their targets' intellectual property (IP). This is a broad category, including everything from trade secrets to customer lists to pricing strategies. All of this information can potentially prove useful for an industry rival, and its exposure will therefore damage the targeted company.
It is critical to note, though, that these effects are not likely to be visible right away. On the contrary, a competitive disadvantage will emerge over time, as various strategies fail to yield positive results.
This effect will be even more pronounced if the data breach is not discovered for an extended period of time, as is often the case. If this happens, then the business will struggle to first identify the reason for its underperformance, and then will need to take steps to correct the situation. The economic consequences of such an incident can be devastating.
In many cases, data breaches generate the attention of governmental agencies that are tasked with overseeing compliance with data security regulations. This is due to the simple fact that breaches are often at least partially the result of a failure on the company's part to abide by these rules and guidelines, which are designed to protect customers' sensitive data.
The most obvious regulatory consequences of a data breach are fines. These typically receive the most attention, and can indeed prove catastrophic for some organizations.
However, there is another, longer-term effect that should not be overlooked: auditing. In many cases, government agencies mandate the a business that has failed in regard to data security will receive regular, periodic audits to verify its compliance with relevant regulations. These audits can be time-consuming and invasive, causing further disruption and economic pain to the company.
Last, but hardly least, is the issue of reputation. Consumers do not want to do business with firms that cannot guarantee the safety of client information.
Thanks to Internet search engines, it is extremely easy for firms to lose their reputations for data failures, as stories about these incidents will likely dominate Google search results. The only way to overcome this issue is through consistent search engine optimization efforts, or by avoiding a data breach in the first place.