Impact of cybercrime on business
Data breaches have been happening for as long as companies have maintained records and stored private data. But, the proliferation of data, technological advances, and the digitization of data storage in the last decade or so have seen a sharp rise in the number of data breaches. Leveraging these developments, cybercrime is evolving. Criminals have turned their attention to the soft underbelly of corporates – stored data. Now, the risk of having sensitive information lost or exposed is greater than ever. And companies are feeling the pinch: All the largest data breaches in history have occurred since 2005 and the size and scope of these breaches are only getting larger by the day. We examine some of these breaches and consider their effects on the companies that fall victim.
Related: 5 easy ways to fight cybercrime
Damaged reputation: Counterproductive to building a brand
The web is an interesting place: Once the information has been put out, it’s likely to live there forever, no matter how hard one tries to erase it. Think about the last email that you sent that contained confidential information. The email probably had an intended recipient. You probably don’t want that information to be seen by anyone except the recipient. Sadly, it could easily be made public if your account is hacked. If you store anything online: pictures, files, documents, you risk that data being exposed to the public should your data center (or cloud) be breached.
The results of a global survey by Gemalto on its latest findings on data breaches and the lasting impact they have on customer loyalty have been released. According to the survey, the exposure or theft of sensitive customer data will have a negative effect on the breached organization’s relationship with its customers. Nearly 95 percent of respondents indicated that they’d consider legal action against any parties involved.
Perhaps not so shocking, is that most customers would be willing to completely break ties with a breached organization. Nearly two-thirds of those surveyed indicated that they’d end their relationship with an organization after their personal information had been exposed, never to return, and certainly never recommend the company. At its core, a data breach results in the erosion of customer trust.
Damage to intellectual property resulting in the loss of a competitive edge
Without diminishing the effects of the exposure of sensitive customer information, cybercrime and data leaks can also have a negative impact on a company's competitive edge. Consider the effects of having an intellectual property like business ideas, marketing campaigns, or business expansion plans stolen or exposed. This breach might render any of these ideas useless or ineffective and result in serious damage towards business growth and revenue gains, especially if they land up in the hands of one’s competitors.
The biggest cybercrimes in history
The internet service company Yahoo! reported two major breaches of user account data in late 2016. The first breach occurred sometime in 2014 and affected more than 500 million Yahoo! user accounts. The second breach occurred slightly earlier and affected more than1 billion user accounts. These breaches are considered the largest cybercrime in the history of the internet. Specific details of data involved include names, email addresses, phone numbers, encrypted security questions and answers, birthdates, and encrypted passwords.
In a practical show of the effects of a data breach, Yahoo! was hugely criticized for its tardiness in disclosing the breaches. They currently have several lawsuits against them and are facing an investigation from the US Congress. Most significantly though, the breaches threw the July 2016 acquisition of Yahoo! by Verizon Communication – to the tune of $4.8 billion – into doubt.
The professional networking website LinkedIn was breached in June 2012. Encrypted passwords for nearly 6.5 million user accounts were stolen by cybercriminals and posted on a public password forum. Within hours, the plain text passwords for thousands of accounts were available online. LinkedIn responded with an official statement and an email to all of its users with instructions on how to reset their passwords This was a positive response from the company in the face of the breach. Then, in May 2016, the networking giant was again left a little red-faced when they discovered that an additional 100 million email addresses and passwords from the 2012 hack had been leaked. Again though, LinkedIn responded well, invalidating all the passwords of users that had not changed their passwords since 2012.
Information like the data received from Yahoo! and LinkedIn breaches is sold to the highest bidder on the dark web.
When it comes to data security, businesses will do well not to skimp. Business owners are bound to get what they pay for. And considering the damaging effects of cybercrime it’s best that the more resources are given to the securing of company data, the better. Particularly if we consider the proliferation of the IoT and the connectedness of things. Cybercriminals are going to keep pushing the envelope using new technologies and slicker processes to attack data centers (or the cloud). But keeping updated, cutting-edge security systems will give your business a greater chance at longevity and success without running the risk of being hacked. Read more on how to protect your business from cybercrime in our recent article on the subject.