Protecting Sensitive Data: A Black Swan Never Truly Sits Still
The black swan – a rare and unpredictable event notorious for its ability to completely change the tides of a situation.
For cybersecurity, these nightmares can take the form of disabled critical services such as municipal electrical grids and other connected infrastructure networks, data breaches, application failures, and DDoS attacks. They can range from the levels of Equifax’s 2018 Breach Penalty Fines (estimated close to $1.5 billion), to the bankruptcy of Code Spaces following their DDoS attack and breach (one of the 61% of SMBs companies that faced bankruptcy per service provider Verizon’s investigations), to a government-wide shutdown of web access in public servants’ computers in response to a string of cyberattacks.
Litigation and regulation can only do so much to reduce the impact of black swans, but it is up to companies to prepare and defend themselves from cyberattacks that can lead to rippling effects across industries.
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If It’s So Rare, Why Should My Company Care?
Companies should concern themselves with black swans to understand the depth of the potential long-term financial and reputation damage and suffering. Radware’s research on C-Suite Perspectives regarding the relationship between cybersecurity and customer experience shows that these executives prioritize Customer Loss (41%), Brand Reputation (34%), and Productivity/Operational Loss (34%). Yet, a majority of these same executives have not yet integrated security practices into their company’s security infrastructure such as their application DevOps teams.
The long-term damage on a company’s finances is note-worthy enough. IT provider CGI found that for technology and financial companies alone, they can lose 5-8.5% in enterprise value from the breach. What often goes unreported, however, is the increased customer onboarding costs to combat against large-scale customer churn following breaches.
For the financial sector, global accounting firm KPMG found that consumers not only expect institutions to act quickly and take responsibility, but 48% are willing to switch banks due to lack of responsibility and preparation for future attacks, and untimely notification of the breaches. News publication The Financial Brand found that banking customers have an average churn rate of 20-40% in 12 months, while a potential onboarding cost per customer can be within the $300-$20,000 range. Network hardware manufacturer Cisco estimates as high as 20% of customers and opportunities could be lost.
Just imagine the customer churn rate for a recently-attacked company.
How does that affect me personally as a business leader within my company?
When data breaches occur, the first person that typically takes the blame is the CISO or CSO. A common misconception, however, is that everyone else will be spared any accountability. But the damage is not limited to just security leadership. Due to the wide array of impacts that result from a cyberattack, nearly all C-level executives are at risk; examples include but are not limited to Equifax’s CEO, Richard Smith, Target CEO Gregg Steinhafel and CIO Beth Jacob. This results in a sudden emptiness of C-Suite level employees. Suddenly, there’s a lack of leadership and direction, causing its own internal combination of instability.
Today’s business leaders need to understand that a data breach is no longer limited to the company’s reputation, but the level of welfare of its customers. Just the event of a data breach can shatter the trust between the two entities. CEOs are now expected to be involved with managing the black swan’s consequences; in times of these hardships, they are particularly expected to continue being the voice of the company and to provide direction and assurance to vulnerable customers.
A business leader can be ousted from the company for not having taken cybersecurity seriously enough and/or not understanding the true costs of a cyberattack – that is, if the company hasn’t filed for bankruptcy yet.
Isn’t this something that my company’s Public Relations department should be handling?
One of the biggest contributors to the aftermath chaos of a black swan is the poor/lack of communication from the public relations team. By not disclosing a data breach in a timely manner, companies incur the wrath of the consumer and suffer an even bigger loss in customer loyalty because of delays. A timely announcement is expected as soon as the company discovers the incident, or according to the GDPR, within 72 hours of the discovery.
A company and its CEO should not solely depend on their public relations department to handle a black swan nightmare. Equifax revealed its data breach six weeks after the incident and still hadn’t directly contacted those that were affected, instead of creating a website for customer inquiries. Equifax continues to suffer from customer distrust because of the lack of guidance from the company’s leadership during those critical days in 2017. At a time of confusion and mayhem, a company’s leader must remain forthcoming, reassuring and credible through the black swan’s tide-changing effects.
Following the cybersecurity black swan, a vast majority of consumers must also be convinced that all the security issues have been addressed and rectified, and the company has a plan in place for any future repeated incidents. Those that fail to do so are at risk of losing at least every 1 in 10 customers, exhibiting the potential reach of impact a black swan can have within a company alone, beyond financial aspects.
How Do You Prepare for When the Black Swan Strikes?
When it comes to the black swan, the strategic method isn’t limited to be proactive or reactive, but to be preemptive, according to news publication ComputerWeekly. The black swan is primarily feared for its unpredictability. The key advantage of being preemptive is the level of detail that goes into planning; instead of reacting in real-time during the chaos or having a universal one-size fits all type of strategy, companies should do their best to develop multiple procedures for multiple worst-case scenarios.
Companies cannot afford to be sitting ducks waiting for the black swan to strike, but must have prepared mitigation plans in place for the likelihood. The ability to mitigate through extreme cyber threats and emerging cyberattack tactics is a dual threat to the company, depending on the level of cybersecurity preparation a company possesses. By implementing a strong cybersecurity architecture (internal or third-party), companies can adapt and evolve with the constant-changing security threats landscape; thereby minimizing the opportunities for hackers to take advantage.
In addition to having a well-built security system, precautions should be taken to further strengthen it including WAF Services, SSL Inspections, DDoS Protection, Bot Protection, and more. Risk management is flawed due to its nature of emphasis on internal risks only. What’s been missing is companies must do more to include the possibilities of industry-wide black swans, such as the Target data breach in 2013 that later extended to Home Depot and other retailers.
It’s Time To Protect Sensitive Data
In the end, the potential impact of a black swan on a company comes down to its business owners. Cybersecurity is no longer limited to a CISO or CSO’s decision, but the CEO. As the symbol and leader of a company, CEOs need to ask themselves if they know how their security model works. Is it easily penetrated? Can it defend against massive cyberattacks? What IP and customer data am I protecting? What would happen to the business if that data was breached?
Does it protect sensitive data?
