data breach

Article written by Dani Andrews


Make no mistake about it: data breaches are a serious threat.

In the digital data-driven age, cyber security protection is a crucial consideration for any business owner in virtually every industry. From credit reporting bureau Equifax to alternative dating site Ashley Madison, data breaches have in the recent past cost the biggest and most data-rich companies either millions of dollars in damages, or the equivalent in terms of brand image and customer trust. Thankfully, from direct digital initiatives to the very legal structure of your company, there are many ways to fine-tune your company’s overall preparedness against data breaches.

Your first line of defense should be a well-developed and adaptive cyber security plan or strategy. If your business doesn’t already have a dedicated cyber security expert – or at least able to reach out to a consultant – acquire one immediately. However tech-savvy you and your business partners might be, you will be able to create and develop a much more effective strategy when your core team includes a dedicated cyber security professional. This factor will be even more crucial as the whole world becomes even more tech-dependent in the coming years.

For instance, according to global cyber security experts at KnowBe4, the massive digital migration brought on by the global health crisis has created new digital vulnerabilities for companies getting more engaged in remote working. The same is true for any business that depends on mobile banking, industrial control systems, smart mobile technologies, e-mail communication, and a slew of other essential digital tools for business. Given the rapid digitization of the world’s industries, it should come as no surprise that the coming years will be a constant battleground between data thieves and the cyber security experts of companies carrying any amount of useful financial, personal, or business data.

By having one such expert on your side, you can not only cover your bases in terms of the above-mentioned factors, but also install preventive measures against data breaches. For instance, Strategic Cyber Partners specializes in providing companies with simulation exercises that tests their current defenses against the latest threats. Apart from building your actual cyber defense infrastructures, these experts will also be integral in creating and developing a culture of preparedness within and around your business. This includes but isn’t limited to training employees and even educating customers and clients in data defense. While these and other similar services may come at a significant initial cost, think of it as an investment in the long-term digital protection of your company.

Outside of direct cyber security interventions and within the purview of business law, there are other ways to prepare for the potentially devastating effects of a data breach. This factor is especially relevant for startups that are yet to register with the state and can still pick which business structure they want to start with. Generally speaking, the faster you scale, the larger your risks and potential liabilities become – the more you should think about registering as a corporation or a limited liability company (LLC). Doing so can allow you to prepare for the potential legal problems that inevitably come with successful attempts at stealing you and your customers’ data.

One of the main reasons business owners go to the trouble of registering as either a corporation or an LLC is because it gives them legal liability protection. By registering your business as either of these two structures, your company becomes a separate legal entity from its owners. In the context of cyber security, this means that while your company can be sued by customers who have been severely affected by a data breach, you or any of your company’s other owners cannot. That’s what liability protection means. And it’s what shielded the owners of Equifax from being sued (and their personal assets from being seized) by the Federal Trade Commission (FTC) when a targeted data breach compromised the security of 147 million of their global clients in 2017.

Instead of the owners themselves, the government went after Equifax as per the FTC’s mandate. And while the corporation has had to shell out a whopping $425 million to pay for damages to both individuals and businesses that were affected by the data breach, this money was taken from the company’s coffers and not the personal assets of the owners. The same type of protection is afforded to LLCs, which are basically more flexible versions of corporations. This is why registering as an LLC or a corporation now will protect you from any business debts or lawsuits that could occur from future data breaches. At the same time, it should be noted that incorporating might come at a considerable cost, while the requirements for organizing an LLC vary from state-to-state. You should confer with a business attorney before committing to any specific business structure or green-lighting any restructuring.

These are just some of the fundamental ways in which your business can be prepared for data breaches of any type or scale. Get a cyber security expert on your side, talk to your business attorney, and aim towards developing a comprehensive strategic cyber defense plan that can cover all the ways in which hackers can get your data.


Dani Andrews is a business consultant and blogger. She dedicates her time in learning about the latest business trends and strategies. On her free time, she enjoys reading about the innovations in this space.