According to chief information security officers (CISOs), in 2023, three out of four U.S. companies faced the risk of a significant cyber attack. Analysts project cyber crime to cost the U.S. more than $452 billion in 2024, potentially reaching $1.8 trillion by 2028. For most companies, a cyber breach isn’t a question of if but when. So, how should your business clients handle a breach?
When a breach hits, panic and confusion are your worst enemies. The clock’s ticking, and every second counts in containing the fallout. Knowing what to do after a data breach can mean the difference between a minor hiccup and a full-blown catastrophe. But let’s face it: Not everyone gets it right.
Let’s examine the blunders companies often make when the digital walls come crashing down. As a Cyber Insurance broker, you can learn from their mistakes to help protect your clients.
How Companies Mishandle Data Breaches (And the Consequences That Follow)
Data breaches can affect any business—even giant enterprises aren’t safe. Here are some notable examples of companies that made data breach response mistakes that hurt their finances and reputation.
Equifax
The Federal Trade Commission (FTC) alleges that Equifax, a credit rating agency, failed to patch a critical vulnerability found in March 2017, allowing multiple hackers to exploit it. Equifax was found to have a slow response and poor communication, which exposed sensitive data for more than 147 million people. The consequence? A $700 million settlement, with $100 million going to civil penalties.
AT&T
Telecommunications company AT&T suffered a massive breach that exposed almost all of its 109 million customers to an increased risk of identity theft. This breach resulted in a class-action lawsuit that accused the company of not being transparent. AT&T allegedly delayed notifying customers after the breach and may have paid hacking group Shinyhunters $370,000 in Bitcoin to delete the stolen files.
Meta (Facebook’s parent company)
Meta mishandled the Cambridge Analytica scandal, where user data was misused for political purposes. Facebook, the world’s largest social media platform, exposed the personal information of 87 million users, which was then exploited to target U.S. voters during the 2016 election. The fallout resulted in the company paying $725 million in fines and incurring a monumental loss of trust among users and the public.
Big corporations have huge cyber security budgets, yet they still mishandle data breaches. How prepared are your clients?
Cyber security is a minefield, and not knowing what to do after a data breach can have severe consequences. Legal repercussions, financial hits, and damaged reputations are just the tip of the iceberg. For Cyber Insurance brokers, ensuring clients have effective data breach response plans isn’t just a good idea—it’s essential. Don’t let your clients become the next cautionary tale.
What NOT To Do After a Data Breach
Affected companies may not always know what should happen after a data breach, and that could lead to disastrous consequences. Here’s a list of common post-breach mistakes and what companies should NOT do:
1. Panic and Delay
Panic and hesitation make matters worse, as Equifax learned the hard way. An efficient response requires a prepared Incident Response Team (IRT) with clearly defined roles and responsibilities. Each team member should focus on specific tasks like containment, eradication, or recovery. Also, having a guide for quickly implementing the pre-planned response strategy is crucial for minimizing damage.
2. Fail To Be Transparent
Withholding information from affected parties and stakeholders can be disastrous. AT&T’s delayed notifications eroded customer trust. Transparency builds trust and mitigates long-term reputational damage. Communicate openly and promptly with the public and those affected, detailing what happened, what’s being done, and how it affects them. Clear, honest communication is key to maintaining trust.
3. Neglect Legal and Regulatory Requirements
Ignoring legal obligations after a breach can lead to fines and legal consequences. Meta faced significant backlash and financial penalties for mishandling data regulations. Ensure compliance with data protection laws like GDPR and CCPA by immediately notifying authorities and affected individuals. Staying ahead of legal requirements protects companies from additional fallout.
4. Fail To Secure Systems Post-Breach
After a breach, immediate action to patch vulnerabilities is essential. Equifax’s failure to secure its systems quickly enough resulted in repeated issues. Conduct a thorough assessment, update all systems, and enhance security protocols to prevent further breaches.
5. Fail To Complete a Post-Breach Analysis
A thorough post-breach analysis is necessary to prevent future incidents. Ignoring this step can leave your clients vulnerable. They must analyze what happened, why it happened, and how to prevent it in the future. Regularly update and test the breach response plan based on these findings to strengthen defenses and reduce the risk of repeat incidents.
Protect Your Clients Against Data Breaches With ProWriters
You know what to do after a data breach. However, your clients need to be proactive against cyber attacks. One of the best ways to keep them secure is to offer comprehensive Cyber Insurance. That way, they’re covered, and their business can quickly recover in the event of a data breach.
ProWriters provides high-quality insurance policies and provides you with numerous resources to educate brokers and prevent cyber attacks.
Equip your clients with the right coverage to navigate the digital minefield confidently. Contact ProWriters today to provide your clients with the best in Cyber Insurance solutions.