As the digital landscape evolves, businesses encounter new cyber threats they could not have imagined a decade ago. The reality of running a company in 2024 is such: no one wants to face a nightmare scenario but everyone has to be ready for it. Perhaps the biggest threat for startups is data breaches, and their consequences can be financially ruinous.
The risk of a data breach should not be downplayed. It’s crucial to have a strategy in place to mitigate the harm caused by a cyberattack, but it’s just as important to set up preventative measures that protect your startup before it’s targeted. Let’s see how significant the consequences of a data breach can be and how you can keep your business secure in the face of emerging threats.
How impactful are data breaches?
Imagine that you wake up one day to learn that nearly a hundred gigabytes of your company and customers’ data have appeared on the dark web. Names, addresses, credit card details, perhaps even login credentials – all for the highest bidder on the black market to buy.
T-Mobile experienced a similar scenario in November 2023 when it was reported that nearly 90 GB of data related to the telecom’s clients were exposed. This was not the first cybersecurity incident that year – the company had reported cyberattacks in January and March. The recurring incidents reveal the determination of cybercriminals and the impact of data breaches on companies and their clients alike. That said, it’s not just the big fish that are targeted by data breaches – startups are just as likely to be targeted.
According to research conducted by BlackFog in 2023, approximately 61% of small and medium businesses in the US and UK experienced a successful cyberattack in a 12-month period, leading to downtime and reduced customer retention. Furthermore, 39% of the organizations reported that the breaches led to a loss of customer data.
Cause and effect
Looking closer into defenses that companies use, passwords remain at the top of the list as the primary means of authentication. However, relying on passwords as the sole protectors for all company data isn’t enough. That’s why organizations typically use multiple different security measures, including firewalls, secure private networks, and routine software updates. Measures like employee training and on-site security are also considered part of the strategy. Multiple features of online and on-site measures are often combined to form a defense in depth strategy.
But why is it such a bad idea for your startup to rely on passwords alone? As it turns out, passwords are notoriously the Achilles heel for organizational security – and the culprit behind this is the users themselves. Verizon’s 2023 Data Breach Investigation Report reveals that around 74% of all data breaches involved the human error factor in some way, whether it was misuse, social engineering tactics, or other mishaps.
It’s unsurprising that the breach figure is so high. According to the latest NordPass survey, anaverage person handles around 170 passwords for personal use and around 90 for work purposes. Coming up with unique alternatives isn’t easy – not to mention the stress of keeping personal and work credentials separate. Not all passwords in this number are frequently used, either.
If an employee needed to make a one-time purchase on an e-commerce site they weren’t expecting to revisit in the future, they might reuse an old password to make signing up quicker. If that platform were to get breached, the password would become vulnerable not just on that platform but on any site where it was reused. Juggling dozens of accounts online means picking convenience over security, and that’s a dangerous game.
The price tag
As we’ve established, human error plays a massive role in data breaches. In fact, nearly every other case of a data breach uses stolen credentials, phishing, and exploits to gain unauthorized access to the system.
This racks up impressive costs. In 2023, IBM reported that a data breach cost organizations with fewer than 500 employees around $3.31 million on average – up 13.4% compared to 2022. For many startups, such an amount can mean the closure of business, not to mention other consequences, like reputational damage and loss of customers’ trust.
Dealing with the aftershock
Of course, the financial losses aren’t the only aftermath startups have to cope with after a data breach – the whole organizational structure takes a hit. In some cases, a breach may impact solely customer data or solely employee credentials; however, instances where both are breached are just as likely.
The negative consequences for customer satisfaction are easy to perceive. Breaches often lead to system downtime, whether during the attack or while teams work on fixing the damage, meaning that customer service is interrupted.
This starts a chain reaction as it directly impacts the workflow – companies cannot collaborate, sales teams can’t proceed with contracts, and the overall service satisfaction plummets. The whole business can be inaccessible for hours or even days until access to the service and resources is restored. Downtime means fewer sales, which, in turn, means less money in the budget – a hidden price tag not included in the data breach cost statistics.
It’s not just interrupted service that upsets the customers. Learning that a company you entrusted your personal data to has been hit is terrifying and can lead to a sense of hopelessness. This, in turn, can shift the perception of trustworthiness. A hit to a company’s reputation becomes part of the chain reaction and, in some cases, a death sentence to its business activities. After all, once a company is known as “the one that had its data stolen,” it’s a lot harder to appear lucrative to prospective clients and partners.
While the impact of a breach is imminent, businesses have ways to mitigate the damage and protect as much of the data as possible. It’s recommended that an incident response frameworkbe followed to contain and eradicate the threat and restore the system functionality.
Following a clear framework will help manage internal panic and can aid in retaining the company’s reputation, thanks to quick action and response.
How can your startup prepare for a data breach?
Data breaches are scary but can be preventable with some basic measures in place. Whether you’re a small startup or an up-and-coming unicorn, you don’t need to spend all your budget on the priciest security equipment – some good strategizing and reliable software can go a long way. Let’s cover a few tips and tricks you can follow to easily make your startup more resilient to outsider threats.
- Schedule employee training – considering the number of breaches that occur due to human error, it’s important to ensure all employees are aware of correct security practices. Set up regular training sessions to keep cybersecurity skills sharp and stay aware of emerging threats.
- Have an incident response framework in place – we’ve covered the steps of what the framework entails. With a plan on hand, you can feel prepared for the what-if scenario.
- Keep your software up-to-date – cybercriminals are known to exploit software bugs and vulnerabilities. Ensure that your software has the most recent bug patches installed to avoid zero-day exploits.
- Maintain a strong and centralized password policy – you never know when an employee might get lazy, and set up an easy-to-remember password for a frequently used account. By enabling centralized policies and checking password health, you can ensure that all login credentials in your company are unique, adhere to the same standards of strength, and are regularly updated.
- Enable multi-factor authentication (MFA) on all accounts – adding an extra layer to the login process makes accounts more difficult to breach. MFA ensures that your credentials are inaccessible without an authentication device.
- Monitor the dark web – the easiest way to know if your data has appeared on the dark web is to check from within. With the Data Breach Scanner, you can receive alerts if your company’s domains, emails, passwords, or credit card details are compromised.
- Store your credentials in a password manager – it’s far more secure than keeping a publicly accessible spreadsheet, and it protects more than just passwords. The NordPasspassword manager stores passwords, passkeys, credit card details, and other sensitive information in the XChaCha20-encrypted vault. It also supports secure sharing, meaning that you can forward login details from your vault to a coworker without compromise.
Setting up a password manager doesn’t have to take long or cost thousands of dollars – and NordPass has made it very easy for all No Code Founders community members. Claim a three-month trial of NordPass Business with the activation code “NCF” which you can activate using our special link. After the trial, you’ll be able to get up to 20% off on your plan. For this extra deal, contact our team at sales@nordpass.com and mention No Code Founders in the subject line.
While data breaches are scary – and costly – threats, they are avoidable. And with the right defenses in place, you can stay calm and focus on your business growth. Let cybersecurity experts do the hard work for you.
