What are the consequences of a data breach for a company?

Yes, it's true. Any business can be vulnerable to a data breach, but it's important to remember that every company is responsible for the security of the data it collects, whether it belongs to suppliers, customers, employees, partners, or leads.

According to the General Data Protection Law (LGPD), privacy and protection of personal data are fundamental rights for data subjects that must be guaranteed by any company that collects data to offer products and services.

While cybersecurity is often emphasized as important, this article will help you understand why it should be a priority for businesses, outline the consequences of data breaches, and explain how to prevent security incidents in your business.

What is a data breach?

A data breach refers to any unauthorized use, access, disclosure, or loss of confidential or sensitive information. In other words, it occurs when information that should be protected is compromised and accessed by individuals without authorization from the data owners.

It's worth noting that data breaches can happen in various ways, including cyberattacks, theft or physical loss of storage devices, security flaws, human errors, or even malicious actions by employees.

What does the LGPD say about data breaches?

The LGPD mandates that organizations must adopt appropriate security measures to protect the personal data they collect.

In the event of a data breach, the law requires the organization to notify the National Data Protection Authority (ANPD) and also inform all affected data subjects about the breach and the measures being taken to mitigate the damage.

Additionally, the LGPD also stipulates that the responsible organization may face penalties, which can vary depending on the severity of the breach and the organization’s conduct regarding data handling.

What are the consequences of a data breach?

Data protection should be viewed as an ethical and social commitment, making the damages caused by data breaches significant and often immeasurable. A data breach can have several different consequences for companies, including:

• Loss of trust: One of the consequences of a data breach is the loss of trust from stakeholders, leading to a damaged reputation.A survey by Google and Ipsos revealed that control over data is becoming a priority for consumers. The study found that concerns about data handling are starting to outweigh brand loyalty.In this context, a breach can lead to insecurity among customers, employees, partners, or suppliers about sharing their personal data with the organization, potentially negatively impacting business relationships.
• Fines and penalties: The LGPD provides for fines and penalties for any inadequacies in data protection. In cases of data breaches, these penalties correspond to the severity of the violation.Fines can reach up to 2% of the organization’s annual revenue, in addition to the possibility of data use suspension and compensation.
• Reputational damage: Depending on the severity of the breach, it can have a negative impact on media and social media coverage, affecting the brand’s image and reputation.Data protection is a reflection of a company’s commitment to securing its customers or partners. Therefore, data breaches can deter new business opportunities and harm the company’s credibility in the market.
• Loss of sensitive data: Data breaches can result in the loss of sensitive information, such as personal data, financial information, or trade secrets.In such cases, the breach can significantly impact business operations, leading to disruptions and loss of competitive advantage.
• Legal liability: The organization may face legal actions for data breaches, potentially resulting in lawsuits from affected customers, regulators, or other stakeholders.This can lead to substantial legal costs and the need to financially compensate affected individuals.
• Theft of intellectual property: This is a severe consequence of a corporate data breach because methods, strategies, and other company-developed information can be compromised.In addition to the disclosure of confidential information, the organization may also face issues of plagiarism and misuse of its projects.

How to avoid a data breach?

The answer is simple: invest in Information Security!

Having a damage protection plan is the only effective way to prevent data breaches. This includes addressing system flaws and strengthening the culture of cybersecurity within companies.

One factor to consider is that breaches can occur internally—due to insider threats—so it is crucial to invest in training and good digital security practices and raise awareness about the importance of data protection.

As mentioned throughout the text, there are various ways a data breach can occur within a company, and any vulnerability can be an entry point for cybercriminals. Therefore, it's essential to keep systems updated, identify flaws, and fix them.

Bug Bounty is a cybersecurity trend that actively works to detect vulnerabilities in systems through a robust base of ethical hackers. This way, companies can identify potential weaknesses in their systems and establish action plans to address them, making their systems more secure against data breach threats.

Want to know more about how Bug Bounty can help make your systems more secure? Contact BugHunt!