My Customer Data Was Compromised – Now What?

Jennifer Schulze

man works on cover letterAccording to IDC Research, the number one reason cloud projects fail in small and midsized enterprise (SME) companies is because of security and compliance issues. A data breach that compromises customer data is one of the worst nightmares for any business. The stakes are high, especially for SMEs that often don’t have the resources necessary to overcome a poorly handled data breach. In addition, if they experience a data breach, the implications could paralyze, or even worse, destroy business. That’s why it’s important to know how to react in such a situation, have a game plan in place, and work as quickly as possible to restore the trust of your customers.

Understand the threat

While the big security breaches often make the news, the reality is that 90% of data breaches actually occur at SMEs. The costs can also quickly add up. A study from the Ponemon Institute found the average data breach costs small companies $36,000, but that amount can quickly rise above $50,000 if owners handle the breach poorly. To underline the threat, 72% of businesses that suffer a data breach are out of business within 24 months.

Establish contact fast and rebuild trust

Perhaps the most important step during a data breach is to come clean with your customers and openly communicate. You should let customers know why the data breach happened, what data is at risk, and how customers can stay up-to-date with further developments related to the breach. Be aware that customers will be concerned, which is why you should be available to answer questions in a timely fashion.

In almost all states, it’s also the law that you notify customers if their data has been compromised. Otherwise, you may be subject to fines and other penalties.

It’s essential as a small business to work quickly to rebuild customer trust. First, inform your customers of what you’ve done to identify the specific breach and secure your network. Next, you want to let customers understand what you’re doing to stop future intrusions, which means taking steps like adding new security software, working with an external security provider, or hiring a new in-house IT expert. This will help them understand that you’re working hard to prevent this issue in the future.

If there has been a significant data breach involving stolen customer financial information, you should also contact local law enforcement to file a formal report.

Detect and fix the breach

Of course, an important step in your crisis plan is to identify how the breach occurred. If you have a smart data-recording strategy, it means you are already capturing traffic on your network at all hours and recording all network packets for post-incident forensic analysis.

To do this, you should have automated software in place that detects attacks and other unauthorized activity, which means using an intrusion detection system (IDS) that will automatically alert you to suspicious intrusions on your network. On top of that, you should have a log-based IDS (LIDS) to ensure there’s an active log of network intrusions and security policy violations on your network. IBM Security estimated that up to 55% of all attacks are performed by insiders, which means you should look at your own employees as well.

Once you have identified the data breach, you should patch it as soon as possible. Sometimes hackers are still in your system, which means you should diligently search for compromised user accounts, especially those of system administrators, who have more access.

Take steps to minimize damage

Certain steps will minimize the damage of a breach:

  • Have all users reset their passwords to avoid further account data compromises
  • If customers had financial information stolen, they may want to cancel their credit cards, speak with their banks about the breach, and be on the lookout for identity theft
  • All customer data should have been encrypted to begin with. If it wasn’t, it’s time to start encrypting it now
  • Audit your network and ensure it’s ready for future attacks

It’s best to plan ahead before you have a data breach, but if you’ve already suffered one, using the above tips can help you maintain your customer relationships and minimize the damage to your network. Protection of customer trust is paramount. With word of mouth the most important source small and midsized business use to make technology decisions, you know it can’t be compromised by poor security standards.

For more on building customer trust, read How to Build Customer Loyalty Through Digital Emotional Affinity.


About Jennifer Schulze

Jennifer Schulze is Vice President of marketing for SAP. In her role, she manages customer marketing as part of the office of the COO. She has over 15 years of technology marketing and management experience and is a small business owner in the San Francisco Bay area.