What Are Data Breaches? A Clear Guide for UK Businesses (How They Happen & How to Prevent Them)

For an SME, the effects of a data breach can have serious consequences. A data breach is unauthorised access, loss, or disclosure of sensitive information and impacts both the customer and the company in equal measure. Due to their size, small to medium-sized businesses are usually prime targets for scammers and hackers, as businesses of this size don’t typically have the budget to spend on high-grade cyber defences.

What we are seeing more often, though, is that businesses are completely neglecting cybersecurity if they can’t afford the top-of-the-range. There are, of course, plenty of security options that are reasonably priced and do a great job at protecting your business and its customers. Join us in this blog as we outline the causes, costs, and legal consequences of data breaches for small businesses, plus what you can do to prevent them.

What Is a Data Breach?

A data breach can come in a range of forms, with some more prevalent in certain types of businesses. In short, a data breach occurs when sensitive or confidential information is accessed, disclosed, altered or destroyed without authorisation.

For an SME, a data breach could come in the form of a phishing email, an email posing as a legitimate source, whereby the hacker gains unauthorised access as a member of your staff accesses their faux gateway. They then could gain access to payroll, leading to data exposure and, in the worst case, financial loss.

Hackers and scammers are coming up with new ways to access this information all the time, but some of the most common forms of data breaches are:

• Phishing attacks

• Ransomware

• Insider error

• Lost or stolen devices

• Weak passwords

• Unsecured cloud storage

How Do Data Breaches Happen?

As a business owner, your time is in short supply, so you may be left wondering how data breaches happen. Naturally, you’ve got plenty of other parts of the business to worry about, so being clued up on potential data breach causes is essential to saving you time and money. Taking preventative action is far better than reactive, as most breaches are often discovered too late.

Phishing Emails

Phishing emails are designed to convince business owners and staff that they are legitimate emails, usually requesting a password reset or similar. This way, hackers and scammers gain access to your account, who can then begin accessing information you haven’t authorised. They can sometimes come in the form of fake invoices or impersonate suppliers.

Weak Passwords & No Multi-Factor Authentication

Weak passwords and no 2FA are also vulnerabilities for SME data breaches. If you share logins or reuse the same passwords, the chances of a breach occurring are significantly higher than if you were to create unique passwords for all applications that only you know. If you use the same password, and that password has been in a data leak, the hackers have an increased chance of accessing other accounts.

Unpatched Software

Software is regularly updated to improve security, which is why you must stay up to date with software patches. Outdated systems create entry points for hackers, which have been identified as a weakness by the software creator. They will ultimately update it to patch this vulnerability. 

Human Error

Human error is sometimes unavoidable, but there are things you can do to mitigate it. Human errors that lead to data breaches can include sending sensitive data to the wrong recipient or having a misconfigured cloud storage.

Third-Party Suppliers

Another source of data breach that feels somewhat unavoidable is when it comes through a third-party supplier. Should there be supply chain breaches, it is critical that you have systems in place, or you’re forced to react fast.

How Much Do Data Breaches Cost UK Businesses?

It’s not just ‘data’ that your SME could lose in a data breach; there are more knock-on effects that can have a bigger impact on your business. There is of course, the financial implications of a data breach. Depending on what platform or information the hackers gain access to, the immediate financial loss could be nothing at all or considerable, if they gained access to payroll, for example.

The biggest financial impact will be felt during the time your business is ‘down’. If you operate in a sales capacity or ecommerce, anytime your website isn’t live and safe, you’re losing sales, which can impact revenue. There is also the loss of trust between customer and business, with them more likely to go to competitors where they feel their information is safer. The effects on your business reputation shouldn’t be overlooked.

There are potential legal and regulatory penalties also. UK GDPR fines can reach up to £17.5 million or 4% of annual turnover, so the latter is likely to be more applicable for SMEs.

How Do Companies Discover a Data Breach?

Data breaches are discovered by SMEs in a range of ways, but many discover them late due to a lack of monitoring systems. This is why it is so important for SMEs to have systems or managed IT in place to keep on top of this, should they not have the time to do it themselves.

Data breaches are often discovered by customer complaints, such as someone who believes they have received a scam email, for example. They can also be alerted by bank fraud notifications, which are becoming increasingly common. 

Having security monitoring set up means you receive alerts should there be an attempted breach, typically allowing you enough time to halt the attack or stem the breach before it gets out of hand. 

How to Avoid Data Breaches

If you don’t have a managed IT service at your disposal, there are a few ways you can minimise the risk of data breaches occurring in your business.

• Use Multi-Factor Authentication (MFA)
  
• Regular employee cyber awareness training
  
• Keep systems updated and patched
  
• Implement endpoint protection
  
• Use secure, encrypted backups
  
• Restrict user access permissions
  
• Continuous monitoring of systems

As we mentioned before, many small businesses work with a managed IT provider to ensure these protections are proactively monitored rather than reactively fixed.

FAQs About Data Breaches

What Is Considered A Data Breach?

A data breach occurs when sensitive or confidential information is accessed, disclosed, altered or destroyed without authorisation. They come in a variety of forms.

Are Small Businesses Targeted In Data Breaches?

Yes, usually due to seeming the easier target, as many SMEs overlook cybersecurity until it’s too late.

Do All Data Breaches Need To Be Reported In The UK?

No, not all data breaches need to be reported in the UK.

Under the UK GDPR and Data Protection Act 2018, a data breach must be reported to the Information Commissioner’s Office (ICO) only if it is likely to result in a risk to individuals’ rights and freedoms.

How Quickly Must A Breach Be Reported?

You must report a breach to the ICO within 72 hours if it is likely to result in:

• Identity theft or fraud
• Financial loss
• Damage to reputation
• Loss of confidentiality (e.g. medical or HR records)
• Discrimination or other significant harm

Can A Company Recover From A Data Breach?

Yes, a company can recover if the response is fast and transparent.

Protecting Your Business from Data Breaches

Understanding what data breaches are is the first step. Ensuring your systems are protected is the next. If you want help protecting your small business from cyber threats, get in touch with us here at VCI Systems. We offer comprehensive managed IT services to businesses across Berkshire and the UK. We can help you review your current security measures and identify what the next steps are.