Sometimes, a quick and unexpected event can completely change the course of your entire company.
Whether it's an accidental data breach or a malicious cyber-attack, businesses, governments, and individuals can experience huge complications from having their sensitive information exposed.
And without proper attention to detail or a prevention plan, a data breach can be devastating.
An incident involving a data breach can have far more effects than a temporary terror.
When sensitive information is exposed, it can cause major problems for businesses, governments, and individuals alike. Hackers can access your data whether you are offline or online by using the internet, Bluetooth, text messages, or the online services you use.
If you think you’re safe from data breaches just because one hasn’t happened to you yet, think again.
According to CNET, the number of data breaches jumped 68% from last year to the highest total ever. And while there are many factors behind this (such as the size of your company and information type), on average, the total cost of a ransomware breach can reach up to millions.
So, prevention is better than cure.
In this article, we’ll cover how a data breach actually works, how it can impact you, and some tips and tricks to prevent them completely.
Here’s what you’ll learn:
- What Is A Data Breach And How Does It Work?
- 5 Most Damaging Consequences Of Data Breaches
- What Should You Do If A Data Breach Has Occurred?
- How To Prevent Data Breaches: 4 Best Practices
What Is A Data Breach And How Does It Work?
A data breach is a cyber-attack in which sensitive, confidential, or otherwise protected data is improperly accessed and/or disclosed.
Data breaches can happen in any size organization, from small businesses to multinational corporations. And often times, the type of data that gets leaked includes personal health information (PHI), personally identifiable information (PII), trade secrets, and other confidential information.
What’s the difference between each of these sensitive information types?
- PHI - Information, including demographic data, that relates to an individual's past, present, or future physical or mental health or condition
- PII - Information that permits the identity of an individual to whom the information applies can be inferred through direct or indirect means. For example, their passport number, social security number, driver's license number, and so on.
- Trade Secrets - Any business information that has commercial value, derived from its secrecy. For example, new tech you use, how you designed original products, your "secret recipe", and so on.
- Confidential information - Anything that is generally not known to the public and encompasses more than just trade secrets. For example, an individual's personal information (age, date of birth, sex, address), bank information, contact details, personal goals or reports, and so on.
When someone who is not authorized to view or steal personal data do so, the organization in charge of protecting that information suffers from a data breach.
If a data breach leads to identity theft and/or a violation of government or industry compliance mandates, the offending organization may face fines, litigation, reputational damage, and even the loss of the right to operate the business.
For example, in the healthcare industry, HIPAA fines reach up to $50,000 per violation caused by insecure records, human negligence, and malicious intent. Though, it's not rare for health organizations to be fined in the millions because of data breaches.
Meanwhile, GDPR fines reach up to $100,000 for an organization and $10,000 for an individual. Though, some corporations have had to pay up to $100M because of data breaches.
Another difference you should know at this stage has to do with data breaches and data loss.
Here’s what you need to know.
What’s the difference between a data breach and data loss?
Data loss is typically caused by organizations inadvertently exposing sensitive data via security flaws. Such incidents are not the result of cyberattacks.
In contrast, data breaches are usually a consequence of a cybercriminal's persistence in compromising sensitive resources.
However, a data loss could lead to a data breach.
If cyber criminals discover a data loss, it may provide them with the necessary intelligence to carry out a successful data breach.
Another distinction between these two occurrences is the confidence in public exposure.
When sensitive data is stolen in a data breach, it is typically dumped on the dark web, indicating that it has reached the public.
Data loss, on the other hand, can be exposed for an extended period of time with no knowledge of who accessed it or whether it was made public.
Now, before we cover the consequences of data breaches, one last thing you should know is how data breaches happen.
How do data breaches happen?
According to UpGuard, the 6 most common causes of data leaks and breaches include:
- Misconfigured software settings.
- Social engineering or human negligence.
- Recycled passwords.
- Physical theft of sensitive devices.
- Software vulneribilities.
- Use of default passwords.

Below, we’ll cover how to prevent data breaches, so, keep on reading.
5 Most Damaging Consequences Of Data Breaches
Despite increased emphasis on data security, cybercriminals are constantly devising new methods to circumvent defenses and gain access to valuable corporate data.
According to Comparitech, 45% of US companies have experienced a data breach and the number of data breaches soared in 2021 - with over 292+ million individuals being impacted by data breaches.
And it's not just the corporations that are affected by data breaches. 28% of data breaches affected small business victims.
If organizations want to mitigate risk and defend against attack, they must fully understand the far-reaching implications that a data breach could have on their business.
Some of the more serious consequences of a data breach are as follows:
1. Financial implications
The financial impact of a data breach is without a doubt one of the most immediate and severe consequences that organizations will face.
Costs of data breaches include:
- Compensating affected customers.
- Setting up incident response efforts.
- Costs of investigating the breach.
- Investment in new security measures to avoid data breaches.
- Legal fees, not to mention the eye-watering regulatory penalties that can be imposed for non-compliance with the GDPR (General Data Protection Regulation).
- Company's share price and valuation.
- And more.
2. Reputational damage
A data breach also has devastating consequences for a company's reputation.
It is critical for a large-scale company to operationalize data protection by keeping data secure and implementing data privacy processes.
Customer data security, rights fulfillment, and trust-building are all intertwined here.
When it comes to avoiding reputation damage from data breaches, you should look into:
- Creating a privacy policy and sticking to it.
- Explain to customers why you are asking for their data, how it will be used, and who is going to process it.
- Respect the deadlines for resolving customer requests and enable customers to exercise their GDPR rights.
- Explaining how the collected data is going to provide them with useful information or a better customer experience.
- Protecting their data by any means available and adjusting the level of data security to the sensitivity of their data.
For more information on getting the most out of your customer information, see our guide on data security standards.
3. Operational downtime
A data breach can lead to severe disruptions in business operations.
Organizations must contain the breach and conduct an extensive investigation into how it occurred and what systems were accessed.
It is possible that operations will have to be completely shut down until investigators have gotten all of the answers they’re looking for. In extreme cases, this process can take weeks.
This can have a huge knock-on effect on revenue and an organization’s ability to recover.
4. Legal action
Organizations are legally required to demonstrate that they have taken all necessary steps to protect personal data under data protection regulations.
Individuals can seek legal action to seek compensation if this data is compromised, whether intentionally or unintentionally.
As the number and severity of breaches ramp up, we can expect to see more of these group cases brought to court.
5. Loss of Sensitive Data
If sensitive personal data is lost as a result of a data breach, the consequences can be disastrous.
Personal data is any information that can be used to identify an individual, either directly or indirectly. Everything from a name to an email address, IP address, and images will be included. It also includes sensitive personal data, such as biometric or genetic information, which could be used to identify a person.
You must have a well-coordinated security strategy in place that protects sensitive data, reduces threats, and protects the reputation of your brand.
Because data breaches are becoming more common, how you respond to one can go a long way toward preserving your company's reputation and preventing you from losing your customers' trust.
Prevention is better than cure.
But what do you do if your company was hit by a data breach?