The Real Risks of a Data Breach

Data breaches are a growing problem, but few small businesses are addressing their risks. Unfortunately, the financial and reputational damages of a breach can be substantial. This is especially true for small businesses and professional services firms who are entrusted with sensitive information.


When a data breach occurs, the immediate cost of incident response ranges from $15,000 at the low end to hundreds of thousands at the high end. This cost is primarily to triage the damage and eradicate the threat. It does not include attorney fees, IT support, or financial losses resulting from the breach.

In many cases, the real damage only begins to materialize after a breach is contained. A forensics team will need to examine the data that was involved and an attorney will need to determine whether breach notification laws are triggered. This is  an arduous process, but serious penalties apply to businesses who fail to provide notice once the breach is contained.


At this point, the risk of legal exposure may begin to emerge. Lawsuits brought by affected parties, enforcement actions, fines, and professional sanctions will need to be considered. It is important for businesses to take proper steps following a breach to protect their interests and mitigate their liability.


If breach notification is required, then each affected party must be notified that their sensitive information was compromised. Aside from the reputational damage this may cause, a pool of potential plaintiffs will have just been alerted that they may have a claim against the business. However, failing to provide notice is unlawful and will only make matters worse. 


After notification is made, the affected business will be in a state of limbo, as it waits to see whether lawsuits are filed or other actions are taken. Even a relatively small breach may draw the attention of regulators, who may conduct their own investigation and bring an enforcement action, which can consume the business for years.


Assuming the business can survive these hardships, it may begin on a long journey of remediation and recovery. The business will need to take steps to improve its security and attempt to restore its reputation. Unfortunately, cyber attacks have become a common, low investment crime, and hackers often seek out easy targets, which frequently include small businesses.


The best way to mitigate these risks is to take steps to protect your business and its information assets. The topic of data security can seem mystifying, but we can cut through the fog to help you reduce your legal exposure. Give us a call and we will provide a free consultation on how we can protect your interests.

Call (248) 579-9537

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