Identity theft is often seen as a crime that affects individuals. Victims of ID theft are usually saddled with expenses they didn’t make, credits they didn’t apply for, or they may even be held liable for crimes they didn’t commit.
This happens because cybercriminals managed to put their hands on bits of personal or sensitive information like Social Security numbers or bank account details. With these data, they manage to assume a real person’s identity and commit fraud in their name.
While it’s easy to see how a person would be impacted by such an experience (increased stress, anxiety, emotional issues, and so on), businesses and organizations are also affected. When a data leak or a breach happens, the company or institution loses more than sensitive and confidential data (which is already bad enough).
Today we’ll take a quick look into how the ID theft industry negatively impacts businesses everywhere.
#1: Loss of Reputation
Would you do business with a company that has been recently hit by cybercriminals and lost the data of its customers? Probably not.
Both customers and business partners tend to stay away from companies that have fallen victim to such nefarious methods. Plus, it doesn’t matter how or why the attack was successful (lack of security and prevention from their part or an inside attack orchestrated by a trusted employee). That business’s reputation is lost and it may even lead to its demise.
The only way to avoid such a negative scenario is to work on prevention. Multi-layered security and protection against ID fraud paired with employee training and background checks are only some of the solutions businesses can use.
#2: Revenue Loss
The immediate effect of a data breach is revenue loss. First, during the attack, you may not be able to use your systems at full capacity (or at all). Depending on your activity, this may result in loss of customers, production, or productivity (due to downtime, broken website, and more).
After the attack, some customers and partners will withdraw their support as soon as they are made aware of the situation (you are legally obligated to notify everyone who may be affected by the breach).
#3: Financial Loss
Besides losing revenue, your company may be mandated to compensate any affected customers. Additionally, you will be required to invest in better security measures and provide the authorities with a full report of the breach investigation.
Depending on the gravity of the situation, you may also be fined for not respecting the GDPR (General Data Protection Regulation) and other data privacy regulations. Furthermore, your company may have to support legal fees.
Lastly, a breach can have a devastating impact on a company’s share price and valuation. One legendary case is Verizon’s acquisition of Yahoo in 2016. Verizon managed to take about $350 million off the asking price because of a data breach that happened in 2013 and came to light during the acquisition negotiations.
#4: Loss of Intellectual Property
Cybercriminals also target companies for their Intellectual Property (designs, recipes, blueprints, strategies, and so on). This is valuable information that they can sell on the Dark Web to rival companies. Plus, if cybercriminals also manage to get hold of personal information from customers or the employees, it will be a resounding success for them and a double fail for your company.
It’s important to know that ill-intended actors target small and medium-sized companies first because they know the level of security is not always in shape. Therefore, it’s important to always have a few tips to keep your business safe.
#5: Internal Disruptions
When a data breach happens, it’s difficult to know the source (or the weak point). In some cases, the attack was possible because of the low level of security measures in the company. However, when the company is invested in a high level of security, the weakest link is the human factor (employees, collaborators, and partners).
In this situation, you will have to perform an internal investigation to identify the device(s) and users who might have caused the problem. Next, you need to establish if it was malicious intent, negligence, or lack of knowledge from the person responsible.
All these create internal disruptions and erode the trust between employers and employees as well as employers in each other. The immediate results will be a hostile work environment, a drop in productivity, and (sometimes) resignations from top talent.
In summary, ID thefts and cybercrime in general, affect both companies and individuals. Therefore, we need to protect ourselves and each other in order to create a safe and thriving online business environment.