A survey of businesses in Northern Ireland has revealed the majority of firms in the country regard data breaches as the biggest corporate crisis risk they face.
The study, by law firm Pinsent Masons, revealed 83 per cent of organisations named the loss of corporate or customer data as their biggest threat, ahead of issues such as health and safety accidents or becoming embroiled in a bribery or corruption investigation.
As well as the immediate costs associated with recovering from such an incident, the reputational damage a firm can experience in the event that sensitive information is compromised can be wide-reaching.
For instance, in the wake of its recent highly-publicised hacking attack, TalkTalk has estimated the “one-off” costs of the breach at up to £35 million, with chief executive Dido Harding noting that it also experienced a spike in customer cancellations in the immediate aftermath of the breach.
Laura Gillespie, an expert in data protection law at Pinsent Masons, said: “Obviously data breaches generate considerable headlines, as we have seen in recent times with the TalkTalk example. The expanding role of e-commerce and big data in businesses of all shapes and sizes could also be factor in bringing this to the fore.”
To minimise the risks associated with data breaches, businesses need to have strong contingencies in place. Developing, testing and regularly reviewing an incident response plan ensures a firm is able to respond to a cyber security, data loss or other issue as effectively as possible.
Ann McGregor, chief executive of the Northern Ireland Chamber of Commerce and Industry, noted that businesses have become a major target for cyber criminals as the digital economy has grown. Therefore, all firms should have plans in place, regardless of size or sector.
“Planning is important for small businesses especially since they often lack the resources to cope easily in a crisis. Failure to plan could be disastrous – at best you risk losing business whilst you recover from the crisis – or at worst your business may never recover and may ultimately cease trading,” she said.