By Kayla Ellis
Since 2014, the volume of data breaches threatening the privacy and personal data of individuals and companies has increased exponentially. These breaches affect investors, companies, private individuals, and public companies both in terms of financial losses and remediation. Leaks like those that occurred in 2014 at Home Depot and JP Morgan Chase ultimately led to the exposure of millions of individuals’ data, millions of dollars in fines, and falling stock values. While both Home Depot and JP Morgan Chase shares ultimately recovered their value, the breaches cost investors and the companies both time and money.
Contrary to many investor expectations, companies affected by major data breaches survive serious attacks and recover stock values. In most cases, when a major company survives a major data breach, it is due to the company’s risk mitigation plan.
Here are three things self-directed investors must know about cybersecurity and risk-mitigation plans when they are placing capital:
Without a Risk-Mitigation Plan, Failure is More Likely
In the face of a major loss such as a data breach and the resulting fines, about two in every five companies will go completely out of business.
The best way for a business, public or private, to weather such a disaster is to have a risk-mitigation plan in place. As a self-directed investor, your portfolio also needs to be optimized to resist disaster scenarios of any type, data-related or otherwise. The ability to discuss, design, and make queries about risk-mitigation is imperative to your ability to conduct due diligence on potential investments.
For example, if you have invested in a multifamily apartment syndication, you will need to investigate the risk mitigation processes in place on multiple levels. First of all, ask how residents’ private information is protected because if that information becomes public, the entire project could be compromised. Second, find out what mitigation steps are in place to deal with the issue should it arise. Third, find out what boundaries protect your own personal information! Know how that information is being protected and what will be done to ameliorate the fallout if your data is exposed.
You Will Be Affected by Data Breaches and Cybersecurity Threats
There was a 50 percent increase in data breaches in 2019 over the previous four years. Those breaches affected 300,000 businesses last year alone. This led to a loss of about $150, per record, of money from the company and, by extension, from investors’ pockets. You must not assume that you will avoid a data breach; at some point, one will affect you.
Damage Control (Risk Mitigation) Can Keep You in Business
Many investors ultimately give up on the concept of risk mitigation. They tell themselves “risk is part of investing” and ask, “If it’s inevitable, why fight it?” Cybersecurity must not fall in the category of things upon which you give up. In the event of a data breach, if you do not have processes in place to protect yourself, your investments, and the people associated with those investments, you will lose far more than you could possibly save by opting out of preparing in the first place.
Kayla Ellis is a full-time student at Kennesaw State University majoring in International Affairs. She provides copywriting and proofreading services, social media marketing strategy, website development, and audio and video editing services to her clients in various industries. Reach her at KaylaEllis98@gmail.com.