How Businesses Can Mitigate the Cost of Data Breaches

Jim Hoffer
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Posted: Nov 17, 2017 12:01 AM
How Businesses Can Mitigate the Cost of Data Breaches

At its most basic level, business is about transactions. Whether purchasing a new car or a new loaf of bread, businesses exist to equip their customers with the goods and services that they want. As obvious as it is, this simple interaction between businesses and customers is becoming increasingly risky. Each time a transaction is made, vital information is exchanged. Credit card numbers, drivers license information, and social security numbers are commonly shared, this same information is the prime target for sophisticated computer hackers around the world. Wired has compiled a list of the worst hacks this year, and its scope is startling. 

When Target was hacked in 2013, and 40 million customers had their data exposed, it seemed like the industry might be on the brink of change. However, devastating hacks have increased in magnitude and frequency. This year, credit monitoring company Equifax endured an extensive hack that exposed sensitive information of over 145 million accounts. The Wall Street Journal writes, “The Equifax hack has stunned many consumers, who are suddenly aware of their own vulnerability to what was long considered a necessary but largely opaque part of the country’s financial plumbing.” This hack has huge implications for the customers, but the company’s bottom line was not left untouched. In the wake of the hack, Equifax lost about $6 billion in stock market value.

As evidence that these devastating attacks are growing in strength and frequency, Yahoo Inc. recently revealed that their hack, which they initially reported as 1 billion compromised accounts, was actually far more extensive and included virtually all of their 3 billion user accounts. Yahoo and Equifax are far from the only companies that have been exposed in this way. Since anyone could be the next victim, companies are spending huge amounts of money trying to defend against attacks while protecting customer information. According to CNN, “hacking attacks cost the average American firm $15.4 million per year.” Additionally, there are untold costs associated with diminished brand reputation, negative mindshare, and customer anger. It short, computer hacks are incredibly costly.

Fortunately, new technologies are giving companies recourse for protecting their assets and will save them billions of dollars. The blockchain is gaining momentum as the transformative technology that has the power and capability to thwart even the worst cyber thieves. Best known for their essential role in powering the world’s most powerful cryptocurrencies, the blockchain is a decentralized ledger system that enables companies to tokenize information to keep it safe and secure. In other words, the same technology that effectively secures our most valuable cryptocurrencies can also be employed to protect customer data and to save companies significant amounts of money.

Blockchain applications such as Selfkey allow customers to tokenize their personal information so that it remains in their control and is usable in the digital age. Using a decentralized system means that user data isn’t stored on centralized servers which can be hacked. Instead, blockchain applications operate on a consensus system that is stored on computers distributed around the world. More importantly, when customer information is tokenized, businesses don’t have to store their information. A simple token exchange can allow identifies to be verified and transactions to be complete without the need to expose sensitive information. It’s a paragon of security, and it’s all in the users’ hands.

This is great for customers, but it’s also great for business. With a customer's identity secure in the blockchain, businesses can focus their financial resources and valuable personnel on other aspects of the business. This means more opportunity for investment, innovation, and growth and saves the company both the legal costs of court cases as a result of such breaches and the security maintenance and upkeep costs as well. Moreover, when customers feel secure making transactions, there is less hesitation exposing financial information and buying from a business. For first adopters, this is a differentiator that sets them apart from the competition that’s still trying to use expensive, outdated technology to solve new and evolving problems.

The blockchain is one of those unique, win-win scenarios in which everyone gets exactly what they want. For businesses, blockchain applications secure customer information, which relieves them of the expensive and laborious task of trying to secure this vital information. With so many companies failing in this regard, the blockchain also ensures that businesses can avoid the embarrassing and devastating fallout from being victimized by an attacker. For consumers, blockchain applications allow them to navigate a digital-first economy with confidence. When consumers control their information, everyone wins.

While computer hackers don’t show any signs of relenting in their malicious practices, the blockchain stands ready to protect businesses and their customers. Its unprecedented security allows everyone to focus on the things that they enjoy and care about the most. It will save businesses billions, and that’s just the financial savings, the possibilities are truly endless.