Unlike before, businesses and organizations currently produce large amounts of data at high speeds. Estimates show that worldwide data will surpass 175 zettabytes by 2025. However, while increasing amounts of data are beneficial to businesses, maintaining visibility and control over these amounts of data is becoming a challenge. Especially when it comes to data processing activities necessary for producing meanigful information from heaps of data.
Fast accumulating data volumes, hundreds of devices, and widespread cloud adoption leave IT supervisors with an inaccurate view of who’s accessing their organizational data. This exposes company data to cybersecurity and privacy issues and makes it difficult for IT personnel to control risk.
What is Data Risk Management?
Data risk management is essentially the process of identifying, evaluating, and controlling risks or threats to organizational data. Data threats can cause businesses losses in the following ways;
- Poor data governance – is the inability of businesses to ensure a high-quality data lifecycle.
- Data mismanagement – this describes compromised or weak data acquisition, validation, protection, and storage processes.
- Poor data security – ineffective cybersecurity measures to protect data from cyberattacks, data breaches, and other risks.
That said, data risk management is a comprehensive process that organizations should adopt right from data collection/acquisition, storage, transformation, and use to mitigate potential risks. A holistic approach to data risk management should minimize the risks of data breaches or exposure while promoting workplace productivity.
Unfortunately, several companies have fallen prey to the endless data breaches that occurred in the last few years. For instance, Yahoo was compromised in 2013, resulting in the exposure of over three billion user information, including names, passwords, birth dates, and phone numbers, from its servers.
Similarly, a data breach that affected Marriott in 2018 compromised the names, phone numbers, passport numbers, email addresses, birth dates, gender, and other sensitive information of more than 500 million guests. Passwords of millions of Facebook users were also exposed after the platform stored passwords in text format, which made it visible to more than 20,000 company employees.
These are just a few data breaches that affected popular companies. However, small businesses aren’t safe, with recent statistics showing that ransomware attacks targeting small businesses made up 71% of the total attacks launched.
How is Company Data at Risk?
In the current digital age, businesses have adopted various methods of sharing data to ease collaboration. Whether your employees work in a physical office or remotely, sharing files with a few clicks is easy. However, without proper safety measures, wrong people can access sensitive information.
That said, business data is exposed to internal and external risks. Internal risks occur due to intentional or accidental employee actions, while external risks are threats posed by cybercriminals. Generally, common types of data risks include;
- Data breaches
- Cloud-based applications unauthorized third-party access
- Human error
- Technological challenges
Why is Data Risk Management Important for Businesses?
Exploited vulnerabilities in business systems or storage area networks affect the company directly and indirectly. For instance, a data breach or any other form of cyberattack renders the company liable for;
- The costs of repairing its affected IT infrastructure
- Datacenter and server downtime and loss of business continuity
- Damaged brand value and customer reputation
- The cost of leased assets, such as regulatory fines and legal consultations
- Diminished employee productivity
Data risks that aren’t proactively managed or mitigated often evolve into costly data breaches. A 2018 study by Ponemon estimating the cost of data breaches found that companies globally spend an average of $3.86 million to recover from data breaches, with these costs increasing over time.
The Bottom Line
Businesses should be wary of data risks that can lead to insurmountable losses. Taking proactive data risk management efforts, such as using strong passwords, training their employees, and strong firewalls can protect sensitive data. Businesses in highly regulated industries should adopt extra security layers that comply with industry-specific privacy regulations.