Mid-sized and large businesses could be in line for fines totalling £20bn if they fail to protect their customers from data breaches, research from Experian has revealed.
Companies that suffer a breach could face serious financial consequences once new data protection regulations are fully introduced across EU member states.
Data breaches are increasingly frequent and, according to Experian’s research UK businesses appear to be acutely underprepared when it comes to the aftermath.
Almost a fifth (17%) of companies have lost confidential information in at least one breach over the last two years and 57% of those affected experienced multiple breaches.
The new rules are likely to significantly raise the reporting and financial stakes. With cyber-criminals becoming increasingly sophisticated, plus unprecedented levels of personally identifiable information now trading online, the problem is not going to go away on its own.
Amir Goshtai, managing director, Affinity, Experian Consumer Services, said: “The introduction of EU Data Protection Regulation, expected to come fully into force within the next three years, will fundamentally and dramatically alter the data breach landscape.
“Even in the absence of a strict notification law at this time, it is well within companies’ best interest to put preventative measures and plans in place now. The companies that stay ahead will be those who focus on protecting their customers.”
If the threat of a substantial fine isn’t enough, almost two thirds (63%) of people say they would leave an organisation if their personal information was compromised.
Customer confidence and loyalty would also be greatly affected with eight in ten Britons declaring that their overall level of trust in an affected company would decrease (80%) and their opinion of the organisation would worsen (79%). More than two thirds (67%) said they would advise their friends and family against doing business with a breached organisation.
The main challenge is that the UK is expected to follow the same upward trajectory that has been observed in the US over the last five years. This means the risks of data breaches will continue to increase at a rapid rate and consequently the repercussions in terms of lost business costs, greater public awareness and reputational damage, will become considerably more serious.
“Tougher regulation will further raise the media and public profile of data breaches. With our data showing that a third of companies currently do not have any kind of response plan in place at all and almost two in ten having suffered a significant data breach in the last two years, it could be a stark wake up call for UK business,” Amir Goshtai added.