Businesses must protect themselves from a variety of potential sources of legal and financial liability, simply to function in the modern marketplace. In addition to old threats like taxes, lawsuits, or natural disasters, a new kind of threat has made itself known: cyber attacks. Businesses that do not take proper precautions to protect against a cyber attack can face a number of potential issues, including the following:
- Breach of sensitive data
- One of the most important things that can occur when a company suffers a cyber attack is the breach of sensitive data. This data could include information about employees or customers, including personal identifying information (PII) which may be used to harm the person whose information is leaked. It could also mean information about ongoing projects or market research gets leaked, potentially harming the company’s ability to succeed.
- Loss or corruption of important files
- A cyber attack could also result in important files and documents getting lost or corrupted. While companies should always back up important files, a sufficiently extensive cyber attack could damage even those back ups. This could result in major expenses to recover what was lost or damaged, assuming any of it can be recovered at all.
- Lost business days
- Depending on the nature and extent of the breach, a cyber attack could render a company completely unable to operate until the damage has been repaired. With servers down and computers inoperable, it could easily cost a business thousands of dollars just from not being able to serve customers. Add on expenses to repair the damage done by the breach, and a single cyber attack can easily wipe out months’ worth of profits in a few days.
- Violations of confidentiality or privacy agreements
- Another possible consequence of a cyber attack could be the inadvertent breach of confidentiality or privacy agreements. A company that is found to have been the victim of a cyber attack that did not take appropriate steps to prevent or mitigate the breach could face major legal trouble for those violations. Anyone who has such an agreement with the company could bring it into court, which can become very expensive very quickly.
- Government fines and penalties
- That may only be the beginning of a business’ legal troubles in the event of a major data breach, however, depending on what data was compromised. If customers’ PII was leaked, a company could face penalties for failing to give timely notice to affected customers, or for not taking steps to mitigate the damage. If the data was of an especially sensitive nature, such as medical data or information protected by legal privilege, there could be far larger fines, and even professional repercussions for licensed professionals involved in the breach.
The business law attorneys at Blodnick, Fazio & Clark are skilled and knowledgeable in the areas of business law and commercial transactions. With offices conveniently located in Garden City, Nassau County, and Babylon, Suffolk County, the firm provides high-quality legal care at reasonable prices. If you require legal assistance concerning business startups, formation, corporate acquisitions and mergers, corporate restructuring, or another business matter, call (516) 280-7105 or fill out our contact form for a free consultation.