What Is a Data Breach?

Data breach is a security incident in which an unauthorized person can access your company’s confidential and sensitive data. It can happen due to an innocent mistake, a malicious insider, or a cyberattack.

A data breach can lead to significant consequences for your company, including financial loss, reputational damage, operational disruption, and legal repercussions. It can compromise various data types, from customer and employee records to intellectual property and financial information.

As companies grow and technology becomes more integrated and complex, hackers’ opportunities to infiltrate digital environments and security systems are increasing. Data compromises in 2023 surged by 78% compared to 2022 ^[1], according to the Identity Theft Resource Center’s annual report.

This article explores everything you need to know about data breaches, from their types and causes to preventive measures. You’ll learn valuable insights into protecting your company’s data and effectively handling a data breach by the end. Let’s dive in!

Types of Data Breach Incidents

Hackers can get unauthorized access to your system in various ways, and knowing about them can help better protect your data and prevent data breach incidents.

The following are two common types of data breaches:

1. Intentional Data Breach

Intentional data breach attacks are caused by hackers, malicious insiders, hacktivists, and state actors on purpose. The perpetrators’ agendas can be personal gains, revenge, or espionage. They can employ malware, password, and social engineering attacks like phishing attacks to access your company’s data. 

Sometimes, they can use tailgating or pretexting to get access to your physical servers to steal data if you haven’t implemented strict physical security measures, such as live surveillance cameras, access control by biometric authentication, and trained physical security personnel. 

2. Unintentional Data Breach

Unintentional data breaches happen when confidential or sensitive company data is exposed or leaked due to technological failure or human errors. Your employee, for instance, can inadvertently share a file containing sensitive data with an unauthorized person. 

Insecure security practices, such as leaving work devices unattended, using public Wi-Fi without enough security measures, losing work devices (mobile phones, computers, USB drives), and using outdated software, can inadvertently allow unauthorized access to your corporate data.    

Having explored various types of data breaches, let’s explore why data breaches occur. 

Causes of Data Breaches

Knowing what causes a data breach goes a long way to keeping your data safe and protecting your organization from a data breach incident. You cannot protect your data and information assets if you don’t know what and who can jeopardize its security.

Here are common causes of data breaches.

• Insider Threats: Your current or previous employees who have access to sensitive data misuse their privileges for personal gains, revenge, or espionage. Sometimes, your innocent employees could share confidential information with their friends or colleagues in good faith, resulting in data breach incidents. 
• Social Engineering: Threat actors employ various social engineering techniques, such as phishing or vishing, to trick your employees or stakeholders into sharing confidential information or login credentials that can be used to access your data unauthorizedly.  
• Malware: Hackers strategically plant various types of malware, such as a keylogger or remote access trojan (RAT), to spy on employees. When the moment is right, they steal confidential, sensitive, and proprietary data, causing a data breach.  
• Password Cracking: Weak passwords provide easy entry points into your network. Hackers use techniques like password spraying, brute force attacks, and other password attacks to guess passwords. Once inside, they can easily steal sensitive data. Hackers can also use stolen credentials sold on the dark web for data breaches. 
• Supply Chain Attack: Hackers target your vendors who have your customers’ data but may not have strong security like your company does. If they are successful, they will steal your customers’ confidential data.  
• Software Vulnerabilities: Unpatched software can have vulnerabilities that hackers can exploit to steal data, causing a data breach. Cracked software downloaded from unreliable sources can have backdoors, which allow unauthorized access to the software, network, and system to steal confidential data. 
• Physical Breach: If your company hasn’t implemented strong physical security, such as live surveillance, security guards, or physical locks, intruders can easily access your workstations and data center areas. They can also employ social engineering techniques, like tailgating or pretexting, to enter restricted areas in your company. Once they have physical access to your storage devices, they can quickly steal data. 
• Shadow Data: Shadow data is the data your organization’s secured data management system cannot monitor, manage, and secure, so it is often unprotected. Examples of shadow data include corporate data stored on employees’ personal devices or cloud accounts, copies of production databases made for testing by development teams, and data left in decommissioned legacy applications. Suppose you don’t take the necessary steps to manage shadow data in your company. In that case, it can cause data breach incidents, for it is outside your data and information security management system. 

Also, a poor user access policy is a recipe for disaster. Without tight access control, your company’s employees will likely have more permission than required to perform their duties, increasing the likelihood of insider risks being realized.  

Now that you know the causes of data breaches, let’s discuss the impact of data breaches in the next section.  

Impact of Data Breaches

The consequences of a data breach can be detrimental and far-reaching. Depending on your industry, it can cause financial troubles, a loss of reputation, and hefty regulatory fines. 

The following are damaging consequences your company can face in the event of a data breach incident.  

Financial Loss

Data breaches can cause significant financial losses. The global average data breach cost has reached $4.88 million ^[2], marking a 10% increase from the previous year. According to IBM’s latest Cost of a Data Breach Report, this surge underscores the growing financial impact of data security incidents worldwide.

Data breach costs involve the following:

• Detecting and containing the incident.
• Deploying an incident response plan.
• Investigating the incident.
• Spending money on legal ramifications.
• Investing in new security measures to mitigate future data breach incidents.

A data breach can also impact your company’s share price and valuation. 

Reputational Damage

A data breach involving customers’ data attracts significant negative media coverage, amplifying reputational damage because stories of data breaches travel faster on social media and news outlets. 

89% of companies ^[3] have said a data breach has impacted their reputation, which can lead to damage to brand image, loss of clients, and difficulty winning new business. A company with a tainted reputation can find it hard to hire skilled employees, as employees may be weary of joining a company with a history of security breaches.

Breach victims, including your customers and stakeholders, may lose trust in your company, making it difficult to rebuild relationships and protect your brand’s reputation. Even if you address the issue quickly, gaining the trust of employees, customers, vendors, and other stakeholders takes time.   

Legal and Regulatory Consequences

Depending on your industry and legal jurisdiction, your company must comply with legal and regulatory requirements, such as the General Data Protection Regulation (GDPR), California Consumer Privacy Act (CCPA), and Health Insurance Portability and Accountability Act (HIPAA).

These laws protect customer data and privacy. Failure to comply can result in costly class action lawsuits, regulatory fines, and damage to your brand’s reputation.

Impact on Customers and Clients

Your customers, vendors, and partners share their data in good faith, thinking you will protect it. A data breach incident erodes their trust, and they will likely take their business to your competitors once they associate your brand with inadequate data protection. You may also struggle to hire talented employees because of your company’s tarnished image. 

Long-Term Business Consequences

Financial loss, reputational damage, and legal fines resulting from a data breach have a long-term impact on your company. Your employees may feel insecure about their data, your customers may lose trust in your ability to protect their data, and you may have lots of negative PR affecting your brand reputation. 

Data breaches can also significantly affect national security if sensitive government or defense-related information is compromised. Protecting such data is crucial to prevent threats to national security.

How To Prevent a Data Breach

A data breach can wreak havoc on your business. It can damage your brand image, cost you a lot of money to pay regulators and legal authorities, and weaken your customers’ and partners’ trust in your company.

Here are some proven strategies to strengthen your defense for preventing data breach incidents. 

Implement a Strong Password Policy 

Weak and easy-to-guess passwords weaken data security, making it easier for hackers to access company accounts and data.

Therefore, you must implement a strong password policy to safeguard company data and accounts. 

Here are some tips for creating a good password policy.

• Passwords should be 12 characters long and include letters (lowercase and uppercase), numbers, symbols, and special characters. 
• Employees must change their passwords regularly.
• It is mandatory to activate two-factor or multi-factor authentication in all accounts.
• Everyone in your company must use different passwords for different password accounts. 

You should also use an enterprise password manager to manage passwords in your company better. A good password manager also makes it easier to share passwords among team members securely. It can also run reports to find if passwords are found in any leaked database, helping you take proactive steps to protect your accounts before threat actors can do any significant damage. 

Keep Your Software Up-To-Date

Threat actors exploit vulnerabilities in old software to steal data and enter your corporate network, so keeping your software up-to-date is an effective way to prevent hackers from exploiting known vulnerabilities in your company’s software. 

To ensure timely software patching, you can set auto-update on all company-used applications. You can also implement centralized patch management to deploy and install patches quickly. 

Enforce a Strict Data Security Policy

A data security policy outlines how sensitive data should be accessed and handled. A good policy should include various security controls to protect sensitive data, including access control policy, data classification, authentication and authorization mechanism, encryption, intrusion detection and prevention system, security information and event management, and more.

Without a strict data security policy, employees, vendors, and stakeholders won’t have a clear understanding of their responsibilities regarding data handling and the tools they should use to safeguard data. This lack of clarity can cause significant gaps in data security, potentially leading to a data breach.

Run Employee Training and Awareness Programs 

Phishing is a prevalent cause of data breaches, with humans responsible for 54%^[4] of these incidents, primarily due to end-user policy violations, carelessness, and a lack of expertise. Implementing regular training and awareness programs for employees can help address these challenges.

Though the content of training programs varies from company to company, a typical employee awareness program to prevent data breaches should include phishing and social engineering awareness training, password security best practices, secure internet usage, and cybersecurity best practices. 

Instead of running an employee awareness training program once a year, organize smaller programs multiple times. This will help you create a cybersecurity culture.   

Conduct Security Audits to Find Security Gaps

You cannot rest even if you have implemented state-of-the-art data security tools and run data security awareness programs multiple times a year. You need to regularly conduct security audits to check for any gaps that need to be bridged to achieve stellar data security.

During a security audit, you should typically focus on the following.

• Identifying vulnerabilities
• Detecting weak passwords
• Uncovering misconfigured systems
• Finding weak encryption 
• Identifying insider threats  
• Discovering missing data regulatory compliances

As the threat landscape constantly changes, security experts recommend that you regularly scan your business website with a reputable website security scanner to check for vulnerabilities that hackers can exploit to steal your data.

Have a Data Breach Response Plan 

A data breach response plan contains steps and procedures to detect, contain, and recover from a data breach while ensuring compliance, communication, and continuous improvement. Though a data breach response plan doesn’t prevent a data breach, having one helps you navigate chaos effectively without losing your mind.

Your data breach response plan should typically include: 

• Incident response team
• Incident detection and assessment
• Containment and mitigation
• Notification and communication
• Evidence preservation and Forensic investigation
• Regulatory compliance and legal considerations
• Remediation and recovery
• Post-incident review and lessons learned

Don’t wait for a data breach to occur. Create a data breach response plan; it will help you minimize the impact of the breach.

What To Do in Case of a Data Breach

In the event of a data breach, immediate and strategic actions are important to minimize the damage. The following are key steps to navigate and manage the situation successfully.   

Identify and Contain the Breach

The moment you suspect a data breach, deploy your data breach incident response team to identify the source and scope of the breach. They will determine the cause of the breach—whether it is due to a phishing attack, malware, or internal error—and also determine how widespread the breach is.

Once identified, your data breach response team will implement strategies to contain it, which can include disconnecting affected devices from the network, disabling compromised accounts, and halting ongoing data transfer. Containment helps prevent further data loss and minimize breach’s impact. 

Notify Key Stakeholders

Communication is vital during a data breach. Notify your internal teams, including management, IT, and legal, to ensure a coordinated and compliant response. If sensitive information is compromised, you should immediately inform the affected parties. 

Have a clear communication strategy to inform all parties involved and maintain transparency to build trust. Ensure that your messaging is accurate and consistent to prevent misinformation.  

Assess and Document the Impact

Assess the compromised data, including personal information, financial data, or intellectual property. Knowing the sensitivity of the leaked data will help you gauge potential risks and required responses.  

You should also keep a detailed record of actions during the breach, including the breach’s nature, how it was detected, steps taken to contain it, and communication with stakeholders. This breach report will be helpful for internal reviews, legal requirements, and improving security controls to prevent further breaches.

Consult Legal and Notify Authorities

You should immediately seek legal counsel because data breaches often involve sensitive and regulated data. Legal consulting will ensure that your responses comply with relevant laws and regulations, such as GDPR or HIPAA. 

Depending on the nature of the breach and applicable breach notification laws, you may need to issue breach notices to affected parties and regulatory bodies.

For example, breaches involving personal data may require notification to data protection authorities within a certain timeframe. Failing to notify authorities can result in hefty fines and legal consequences.

Recover and Secure Data

After notifying authorities, your data breach response team will start working on restoring any lost or compromised data from backups. This is also the time to verify the integrity of your data and ensure that it hasn’t been altered or further compromised.

After recovery, review and strengthen your security protocols. This may involve updating software, improving password policies, changing passwords of email addresses, implementing more robust encryption, and verifying that every email address associated with the breach is secure. Use Have I Been Pawned to check if emails were involved in the past breaches.

The goal is to fix vulnerabilities that led to the breach and prevent future incidents.

Communicate with Affected Parties

You should provide clear guidance to those whose data was compromised, including changing passwords, monitoring credit reports, and taking steps to protect against identity theft.

To make your customers, vendors, and partners feel that you care about their data and digital safety, you should consider offering support services like identity theft protection service or credit monitoring. This can help mitigate identity theft risk and demonstrate your commitment to their security.

Keeping communication lines open and providing updates as you learn more about the breach and the steps being taken to resolve it can help your stakeholders remain calm during a data breach. 

Reputable data security solutions can help you discover, manage, and protect sensitive data in your company. 

Here are data security service providers you can explore for data breach prevention. 

• Cybera: It is a data discovery and data security tool that monitors, detects, and responds to your company’s data risks. It uses AI, machine learning, and its proprietary large language model (LLM) to offer higher precision in classifying data and identifying sensitive data with context relevant to your business’s nature. 
• Imperva: It is a cloud data security solution that protects data in all phases of cloud adoption. It offers wide visibility into data activity, deeper security and threat context, and unified sensitive data protection and compliance. 
• SpinOne: It is an all-in-one SaaS security platform that provides full visibility and quick incident response to your SaaS app. It also provides data leak protection and data loss prevention. 
• Nordlayer’s Secure Access Server Edge (SASE): It is a data security solution that protects your network’s data and business resources. It offers SaaS security, threat protection, secure remote access to improve data security, and more.  
• Forcepoint: It is an AI-powered data security solution that simplifies data protection and prevents data breaches. It provides unified cloud, end-point, and BYOD data protection.

Most of the above data security tools come with a free trial, so you can try them to find the best data security tool that meets your requirements. 

Recent Examples of Major Data Breaches

Check these recent examples of significant data breaches.

What Can Attackers Do With Stolen Data

Hackers can use your stolen data for malicious purposes, which can include identity theft using leaked personal details of victims, financial frauds using details of stolen credit cards and bank accounts, crafting sophisticated phishing campaigns based on stolen data, and financial gain by selling stolen information on the dark web.

Also, hackers can use your stolen data for blackmailing, cyberstalking your customers, partners, and vendors, and plan further cybersecurity attacks.  

Stolen data can also be used for political dealings, where sensitive information is leveraged to influence or manipulate political outcomes.

The value of data for hackers depends on its sensitivity, so they target confidential data, such as personal identifiable information (PII) like social security numbers, financial information, health care data, login credentials, intellectual property, and trade secrets. Any data breach involving these data types can have far-reaching, detrimental consequences on your business. 

Future Trends and Predictions About Data Breaches

Phishing remains a top cause of data breaches. As AI advances, cybercriminals can craft more sophisticated phishing attacks, trick people into sharing login credentials, or install ransomware and keyloggers, often resulting in data breaches.

AI’s rapid growth empowers these attackers and introduces new privacy and security challenges for businesses integrating AI into their operations. Moreover, the swift adoption of cloud computing brings challenges like shadow IT and a lack of cloud security skills. If not addressed, these issues can also lead to data breaches.

By 2025, Gartner ^[5]predicts that 30% of critical infrastructure organizations will face a security breach. So, it’s more critical than ever to understand how hackers operate and strengthen your data security to prevent a data breach incident.