Table of content:
Intro
Data risk is a term that describes the potential for business data to be lost, corrupted, or stolen. Data risks can come from a variety of sources, including cyber-attacks, natural disasters, and human error. In this article, we’re going to focus on cyber-attacks and the types of data risks that they present to businesses, especially industries like health care, financial services, and government, which are most likely to be targeted by hackers.
There are five main types of data risk: security risks, compliance risks, operational risks, privacy risks, and financial risks. Each type of data risk has its own unique set of potential consequences and requires a different approach to management.
In this blog post, we'll explore each of these five data risk types in detail and guide how to effectively mitigate risk using risk management practices.
Security Risks
Data theft is a major security risk for businesses of all sizes. Hackers can target businesses of any size and steal sensitive data and intellectual property, which can be sold on the black market or used to commit fraud. This type of theft can have a major financial and reputational impact on a business.
Data theft can occur in a variety of ways, such as through malware, phishing attacks, or data breaches. To protect your business from this type of attack, it is important to have strong security measures in place, such as data encryption and disaster recovery plans.
Data theft is a serious problem that affects companies of all sizes. Hackers can target any company, large or small, and steal sensitive information like customer data, financial records, and trade secrets. Data theft can have drastic consequences for a company, including financial loss, reputation damage, and legal trouble.
Fortunately, there are steps you can take to defend against data theft. Good Data protection includes implementing security measures like data encryption and access control which can make it much harder for hackers to steal your data. You should also have a data governance plan in place for what to do if your data is stolen, so you can quickly contain the damage and minimize the fallout from the theft.
Compliance Risks
Data theft is a serious compliance risk for companies of all sizes. Depending on the type of data that is stolen, the consequences can range from minor inconveniences to major financial losses. In some cases, data theft can even lead to legal action against the company.
There are a few key things to keep in mind to minimize the risk of data theft in your organization. The most important aspect of mitigating compliance risk is to ensure that you identify what compliance regulations apply to your business and the data that you collect. Once you have identified the compliance regulations of interest then your next step is to implement all desired security controls. While many of these controls will overlap with overall best practices you must implement everything identified in the compliance regulations as they specify to ensure that is not found out of compliance if a data breach does happen. Lastly, you want to get third-party verification of compliance by using trusted auditors/vendors that have experience in helping companies. This way you can be sure that you implemented everything correctly and by the standards.
Some of the major compliance regulations to be mindful of include General Data Protection Regulation (GDPR) and the Health Insurance Portability and Accountability Act (HIPAA).
Operational Risks
Organizations face many risks when it comes to data accuracy. Poor data quality can lead to inaccurate decision-making, missed opportunities, and lost revenue. In some cases, it can even put lives at risk.
Many factors can contribute to data inaccuracy, including human error, technical problems, and data decay. Organizations need to be aware of these risks and put systems in place to minimize them so that inaccurate data doesn’t negatively impact business operations.
Inaccurate data can have a big impact on operations, especially when it comes to data analytics where the data you input into the system greatly affects the accuracy of the analytics. Therefore, it's important to take steps to ensure data quality. By doing so, organizations can avoid the risks and reap the benefits of accurate data.
To protect against the operational risk you need to implement controls that will help to ensure the integrity of your company's data. This includes things like limiting write access, creating backups of important data, using file hashes, and making every effort to collect accurate information from customers. This will help to limit the chances of inaccurate data being used for business operations.
Privacy Violations
As the world becomes increasingly digitized, our privacy is at greater risk than ever before. With so much of our personal information online, it's become quite easy for hackers and other online criminals to access our sensitive data. This can lead to a host of problems, from identity theft to financial fraud. As a business, it's important to understand the privacy rights of your customers and ensure that you are upholding all of them. Failure to do so can result in lawsuits, fines, and even a suspended business license.
In addition to upholding all your customer's privacy rights, there are several things you can do to safeguard your customer's data to prevent data leaks. This includes using strong passwords, keeping your software up to date, and being careful who you share customer information with both inside and outside of the company. By taking these precautions, you can help to keep your customer's personal information safe from prying eyes.
Financial Risks
Data is becoming increasingly important in the modern world. As our reliance on technology grows, so does the importance of data. However, with this increased importance comes increased risk. Here, we will look at some of the financial risks associated with data.
One of the biggest risks is data loss. This can happen due to a variety of factors, such as cyber-attacks, natural disasters, or even human error. When data is lost, it can have a major financial impact on a company. For example, if customer data is lost, it can lead to a loss of sales, and if employee data is lost, it can lead to a loss of productivity.
Another financial risk associated with data is data breaches. This occurs when data is stolen or leaked without the permission of the owner. The average data breach costs as much as $3.86 million to recover from on average globally and over $8 million in the United States.
The best way to mitigate risks is to prevent them altogether. This means having good security and privacy controls to prevent data from being stolen from the company. In addition to this, having good cyber insurance is a good way to offset the cost of a data breach. Cyber insurance is a type of insurance that reimburses you for damages and costs associated with cyberattacks.
Recap
There are many different types of data risks, but the five we addressed here include security, compliance, operational, privacy, and financial. To manage these risks, organizations should invest in data management-related security solutions, creating data backups, organizational policies, third-party verification, and cyber insurance to mitigate the potential for these risks. To learn more about data risks and how to manage them, subscribe to our blog.