Data breach is a term that frightens many large corporations. However, you don’t have to run a huge company to be a victim of a data breach. In fact, small to medium businesses are often the targets of such a cybersecurity attack. This blog will help you understand a data breach, its impacts, and how to mitigate the risk.

What is a Data Breach?

With technology becoming more and more advanced, so do cybercriminals. One of their crimes is a data breach, which occurs when they access critical information, such as usernames, email and physical addresses, phone numbers, and credit card records. These cybercriminals do not have to be in the same location as you. They find ways to bypass network security, often from a remote location.

The Cost of Data Breach to Your Business

A data breach can also be called a data leak, although these terms have different meanings. Nevertheless, they are both detrimental to your business’ health and reputation. Malicious hackers, unknowing employees, and other individuals can get critical information into the wrong hands through a variety of means, including:

  • Ransomware
  • Phishing
  • Using weak passwords
  • Software misconfigurations
  • Third-party leaks

Regardless of the method of gaining confidential records, your business is immediately put at financial risk. Here are some stats according to the newest IBM 2022 report:

  • AUD 6.55 million average total data breach cost
  • AUD 7.26 million critical infrastructure data breach cost
  • AUD 6.8 million ransomware attack costs (without the ransom)
  • AUD 4.6 million in cost savings when an organisation has good cybersecurity
  • AUD 4 million average cost savings for businesses with an incident response
  • 19% of data breaches are due to a compromised business partner
  • 45% of breaches are cloud-based
  • 83% of companies have had two or more data breaches

The same report states that 60% of breaches’ costs are passed on to the customers. You can already tell that this price hike does not make loyal supporters happy. This is just one of the reasons why you need a strong contingency plan to prevent a cyberattack.

How Does a Data Breach Affect Your Cyber Security Policy

Every organisation, big or small, has a set of guidelines and procedures to protect computer systems, networks, and sensitive information. These guidelines are known as cyber security policies, which exist to ensure the business’ data’s privacy and integrity.

A cyberattack, such as a data breach, can have a significant impact on your enterprise’s cyber security policy in different ways, including:

  • Highlighting the weak spots of your existing incident response plan
  • Indicating that the security controls you are currently using in your organisation are inadequate
  • Proving that employee training, especially if the breach is due to human error, is lacking
  • Raising awareness to avoid falling for online traps is next to non-existent
  • Showing weaknesses in your management processes, particularly when it comes to third-party vendors
  • Possible non-compliance with data protection regulations

Unauthorised persons can get access to sensitive information. Not only that, systems can be compromised, which can result in financial losses and diminished reputation. Often, your business could face legal liabilities that also mean more expenses. That’s why you need to create a response plan carefully.

Online security threat and fraud.

Creating a Data Breach Response Plan

No matter the size, industry, or years you are in the business, you should always have a response plan in case your business is under cyberattack. This plan is also known as a cyber security policy, which you can turn to should things go awry. Your plan can differ based on many factors. Whilst you can customise the details to fit your organisation, there are a few important things you must include. The following steps will help you create a response action plan if you ever become a victim of a data breach:

1. Refer to Your Existing Security Policies to Establish a Baseline

Use the company’s current security and privacy policies as a framework for the response plan. Typically, there’s no need to create an entirely new policy. Rather, you can simply expand the existing policy, making sure to include data breaches, cybersecurity attacks, and similar issues.

Your cyber security policy can include various elements based on the essential aspects of your small business. Here are some examples to consider:

  • Response plan to protect confidential financial and customer information
  • Instructions for using devices, including personal and company phones and laptops
  • How to detect malicious emails and other scams
  • Guidance to securely transfer data
  • Remote worker procedures

Suppose you still intend to build a cyber security policy from scratch. In that case, we recommend that
you use the “5Ws and 1H,” which will cover the following:

  • Who the policy is for: Your answer could be the employees, contractors, volunteers, etc.
  • What the policy entails: It should cover all workstations, devices, and network connections, among others.
  • Where the policy is in effect: It applies to all internal and external networks, as well as VPNs and third-party services.
  • Why you need it: Having a robust, documented policy for data breaches and cyber security can help the organisation protect its data and infrastructure.

The final section is the single H, which pertains to the “how.” How do you implement your cyber security policy for your small business? One way to do this is to put the instructions as part of your Standard Operating Procedure, which defines the individual steps to ensure the company is and remains compliant.

2. Have a Team That Will Respond to Data Breaches and Other Similar Cyberattacks

You cannot determine the departments that could be affected by a data breach. However, you can designate at least one employee from key groups, including IT, Communications, Compliance, and Human Resources, to have a specific role in case of a security incident. These people should be notified immediately if there’s a breach, as they are the ones who know the appropriate steps to take.

3. Create a Communication Plan

The communication plan does not have to be complicated. For instance, you can have a messaging deployment schedule, along with an escalation process for a member of the key groups mentioned above. Messaging and communication should follow legal notification necessities, meaning you need to inform parties that may be affected by the breach. These include your customers, vendors, and employees.

4. Learn About Data Breach Insurance

Data breaches are a fact of life in today’s world, unfortunately. But not to worry; you can protect yourself, your reputation, your employees, and your business with the right cyber insurance. This type of insurance stemmed from errors and omissions insurance, which tech companies initiated about two decades ago. The primary goal was to cover events like software crashing into another network unrelated to the business.

Developers working at the office.

Today, you can benefit more from a data breach response policy when you have cyber liability insurance. You may know this insurance as data breach insurance, which will help protect you against financial losses and damages in a cyberattack.

Grace Insurance can keep your small business from some costs resulting from a cybersecurity attack, such as a data breach. With our in-house expertise, we can specifically tailor data breach or cybersecurity insurance that can enhance your cyber defences and response. Contact us today for more information.