Under the General Data Protection Regulation (GDPR), companies and organisations have a legal obligation to protect customer data by following a series of specific guidelines when collecting, storing and managing personal data. This applies to all businesses that collect and process personal information from their clients, no matter the size, industry or niche. Given that data is generally regarded as the single most important asset for a company, it makes perfect sense to take all the necessary measures to keep it safe, especially when cyber-attacks are on the rise in all parts of the world.
However, smaller businesses mistakenly believe that the data their company isn't of interest to cybercriminals, so they believe they are not at risk of a data breach. That’s a huge misconception given that all data can be exploited and is therefore valuable for hackers. This can make small businesses less vigilant when it comes to their data.
Smaller firms also tend to run on tighter budgets. They can't afford to invest as much as their wealthier counterparts in IT security, leaving them more vulnerable to cyber-attacks. It's therefore extremely important for smaller companies to realise that data protection represents a major risk and that they have to go the extra mile to cover all their bases.
What can go wrong?
If the legal and moral obligations of keeping customer data safe are not enough to motivate you to ramp up your data protection efforts, the consequences of ignoring these aspects might be. So, let’s take a look at what could happen if you fail to comply with data protection principles and standards imposed by the GDPR and your small company falls victim to a data breach.
Financial loss
In the best-case scenario, you may get away with just a fine for breaching the GDPR. If you're lucky, none of your customers will be affected by the breach and you’ll be able to recover the data and patch up your security issue.
However, in most cases, businesses that suffer data breaches aren’t that lucky. Most companies experience substantial financial damage in the wake of a cyber-attack. The GDPR fines alone can be costly (depending on the severity of the infringement). Some fines can be as much as 4% of a firm’s annual revenue. But fines are only part of the problem.
Data breaches often result in huge loss of revenue for the affected company. Dealing with a non-functional website or being unable to conduct your operations normally for a period of time can have a massive impact on your income. What’s more, you may also end up facing significant compensation claims from customers for compromising their personal information – as explained by the team behind www.legalexpert.co.uk.
Reputational damage
Even if you are able to get your finances back on track after a data breach, restoring your reputation is not going to be as easy. Reputational damage is one of the long-term effects of a data breach and can lead to a loss of customers and thus a loss of sales.
Once the news spread about the data breach, customer retention is bound to plummet. You’re not only going to lose the clients that were directly affected by the vent, but this is also going to scare away potential customers, and that can cause irreparable damage to your company. It’s going to take a lot of time and effort to restore your image and regain customer trust. And even then, you’re still going to have this event etched forever in the track record of your company.
Loss of intellectual property
It’s bad enough to lose customer data and have your reputation tarnished by a data breach, but losing your intellectual property (IP) can be just as if not even more damaging. If hackers are able to get their hands on documents, strategies, plans and other valuable intellectual assets that your business relies on, this puts the very future of your company in danger. Cybercriminals may sell this information to your competitors or they could destroy it, causing you to lose vital resources and opportunities that could spell the end of your business venture.
How to keep your customer data safe and sound
Apart from complying with GDPR requirements, there are other measures you can take to ensure that you’re doing everything you can to reduce risks and keep your customers’ data safe at all times.
Although businesses rely on data to make important decisions, it’s advisable to limit the customer data that your business collects for two reasons. First of all, your data is going to be less valuable to hackers and therefore the likelihood of becoming the target of a cyberattack is going to decrease. Secondly, if you only collect the essential information you need to conduct your business, your customers will trust you more.
Another measure you can take to keep customer data safe is to limit access to sensitive information. It’s estimated that over 80% of all data breaches are caused by human error, so making sure that only a limited number of authorised users have access to the data you collect can reduce the likelihood of cyber security breaches significantly.
Additionally, you might want to reconsider your storage options if you’re using data silos. This method of storing data is not only inefficient as it makes it more difficult for you to gain insights from analysing information, but it also makes you more vulnerable to data breaches.
Wrapping up
Customers share their private and sensitive information with you in the expectation that you’ll do the responsible thing and take all the necessary precautions to manage this information in a responsible manner and keep it safe. Therefore, you should do everything in your power to live up to your customers’ expectations if you want to earn their trust and get your business to thrive.
Copyright 2023. This article was made possible by supporter GETX Local Company.