Domino Effect of Data Breaches and Account Compromise
The domino effect of a Data breach can be up to 13 times greater than the cost of the single-party incident. The fallout of loss that a company incurs is transferred onto their vendors, contractors, employees like a domino chain impacting everyone.
When a cyberattack is limited to one company, it can be enough to cause financial loss, data compromise, and long term reputation damage. But when the same attack extends to several victims at the same time, the effects seem to multiply.
Researchers at Cynthia Institute have been calling this “ripple effect” of cybercrimes. This is where from one victim, there are downstream losses that impact third parties.
For example: If company A experiences a data breach that has resulted in invoice fraud. It could be 3-12 months before Company B, C, and D receive payment for services rendered due to the insurance claim. This impacts companies B, C, D in significant ways that may not have been anticipated.
Companies B, C, and D are would also be incurring the cost of cybersecurity audits and possible legal expenses to prove they were not the source of the data compromise.
Researchers have shown that the downstream loses to third parties can span multiple degrees of separation. This is the collateral damage of a cyberattack that many people don’t factor into their standard operating procedures.
How many what-if scenarios have your data recovery plan encountered?
Sometimes with business, even experiencing unintended delays can cause harm. For example, what happens if your data recovery is delayed by two weeks or a month? How can your business operate? What is your insurance claim takes 18 months to payout for the loss instead of 6 months?
The domino effect of cyber attacks explained using a real-world case study.
The American Medical Collection Agency (AMCA) breach disclosed in May resulted in the data of 24 million individuals. Most of whom did not have a direct relationship with AMCA but gave data to other entities that passed it to AMCA for debt collection. The breach compromised the AMCA systems, which effected 23 health care organizations, three professional services firms, two business support entities, and a manufacturing company.
Research is showing that the domino effect can impact ten firms outside the initial victim. The most significant incident ripple through 131 organizations outside the initial victim.
Cyber-attacks have been increasing 20% each year since 2008, and these numbers have yet to factor in the ripple effect of damage in reporting. The attack victims have been studied for a long time, yet the ripple effect victims are not factored into consideration.
There are many companies that don’t even realize they have been part of a data breach. Cyber-attacks have a delayed exposure effect as the true impact of the attack may not be experienced until months or years later.
Research also showed that companies with outsourced services are really juicy targets for attackers. Companies that manage the data for other videos can result in millions of client records when compromised. Therefore one victim can result in a massive payout for the cybercriminals.
As you prepare your cybersecurity plans, you need to be aware of your Vendors and who you are sharing data with. How that data is being shared, and how far down the domino does it go?
It’s not uncommon for Outsourced vendors to outsource their work to other vendors. Therefore you really don’t know which part of the onion has your data.
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