What your business can do to prevent data breaches

Data breaches are becoming increasingly dangerous and costly, making their prevention a key concern for businesses of all sizes.

Written by Embroker Team Published November 28, 2024

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The average cost of a single data breach has reached an all-time high of more than $4.8 million. These breaches are costly and can be extremely damaging to your business’s reputation. Cybercrime is on the rise, and schemes such as social engineering and ransomware are becoming more sophisticated with AI and technological advancements. So, it is beyond important to understand what you can do to prevent a data breach from occurring in the first place.

In light of the constantly increasing costs and risks of data breaches, we’ll break down exactly what you can do to prevent one. In this article, we will provide you with the 14 most effective strategies for preventing a data breach, as well as what type of data cybercriminals are after and what a potential breach could mean for your business. Let’s get straight to it.

What exactly is a data breach?

Person looking at a laptop

A data breach is a security incident in which an unauthorized person accesses confidential, sensitive, or protected information. In today’s digital world, almost every business is at risk of a data breach — from small, one-person operations to multinational enterprises. That said, the most striking worry with data breaches is that anyone sharing their sensitive information with your companies can also be exposed. For example, many companies keep sensitive customer and client data on file, which can be exposed in the case of a data breach.

Data breaches are one of the most common types of cyberattacks and can stem from various sources. Additionally, as technology advances, cybercriminals have been employing increasingly sophisticated cyberattack tactics such as distributed denial of service (DDoS), malware, ransomware, password crackers, and AI-driven attacks. In order to defend themselves against these attacks, companies must invest significantly in cybersecurity and hire dedicated security professionals.

All this said, the majority of data breaches do not stem from malicious intent or targeted cyberattacks. In fact, the most common cause of a data breach is human error or mundane oversights by employees with access to sensitive data.

While this doesn’t make them any less damaging, it does mean that good old-fashioned employee training and awareness initiatives can significantly reduce data breach incidents and improve the state of your organization’s cybersecurity.

14 strategies and methods for preventing a data breach

Stop sign

Hackers and cybercriminals are extremely creative in finding ways to steal sensitive information, and in recent years, data breaches have become more and more common. That said, there are many different ways to fortify your systems and shield your company from a data breach. Let’s take a look at some of the most effective ways to prevent a data breach.

1. Use strong passwords

At some point, everyone has used a weak password for an account, such as “1-2-3-4-5” or “p-a-s-s-w-o-r-d,” but when it comes to business, using complex and secure passwords is vital. We simply cannot overstate how important it is to resist the urge to use simple passwords. While they may be easy to remember, these passwords are equally easy to hack.

The best way to ensure everyone in your organization is using strong and secure passwords is to enforce a company-wide policy that sets rules on what must be included in the password, how passwords can be stored, and how often passwords must be changed. 

Here are a few tips for things to include in a corporate password policy:

  • Require passwords to be at least 12 characters long and include a mix of uppercase and lowercase letters, numbers, and special characters.
  • Mandate password changes every 60-90 days and prohibit employees from reusing any of their last five passwords.
  • Encourage employees to use encrypted password managers to store passwords online.

2. Multifactor authentication

Another security measure that can significantly reduce your risk of a data breach is multifactor authentication (MFA). MFA is commonly used by banks, credit card companies, or other important accounts, and acts as a second line of defense against cyberattacks and theft.

Once you enter your password to a device or online account, you’ll then be sent a unique code via SMS or email to verify your login. Alternatively, you may be able to verify MFA with biometric verification using facial recognition or your fingerprint.

This is an excellent cybersecurity feature for companies as it prevents hackers from breaching systems and accounts even if a hacker accesses your password.

3. Prevent employees from using personal devices

Remote work has been on the rise in recent years, and many companies have begun implementing “bring your own device” policies (BYOD). BYODs, while convenient, pose significant cybersecurity risks and can expose companies to a whole host of issues, including data breaches.

For one thing, personal devices tend to lack the same stringent security measures that on-site and company-issued devices have. Since these personal devices are not owned by the company, you cannot implement the same firewalls and usage restrictions. Employees can visit whatever website they want on their personal devices, which could expose the device to malware and put sensitive company data at risk.

Employees may also log into unsecured public wifi networks at cafes, coworking spaces, and libraries, which can leave the door open for hackers.

Head over to our article on cybersecurity tips for working from home for more info on this.

4. Regularly update software

It is pretty easy to forget about software updates. Nowadays, our devices constantly need updating to function properly. That said, while it can definitely be a bit of a headache to stay on top of, updating your company’s software is one of the best ways to prevent a data breach or cyberattack.

Software updates will address and patch any vulnerabilities in computer systems and may even introduce shiny new security features.

Cybercriminals and cybersecurity experts are in a constant game of cat-and-mouse, with hackers searching for vulnerabilities and cybersecurity pros improving security systems. In many cases, by the time a hacker finds a way to infiltrate a system, it is too late because the system has already been updated with new reinforced protocols. This is why you must always update your software.

5. Use VPNs to encrypt data

VPNs are one of the most prevalent cybersecurity measures. These “virtual private networks” (VPNs) encrypt your data and hide your IP address, which makes it nearly impossible for cybercriminals to hack your information. You can think of VPN encryption as a secret code used in the military. VPNs scramble your online data into random sequences, which shields your business’s sensitive data from prying eyes.

This is why they are the best way for remote employees to securely connect to your company’s network. The encryption provided by VPNs protects data transmitted over public or unsecured networks from potential breaches.

6. Set up firewalls and network restrictions

While a firewall is not literally a “wall of fire,” it serves the same purpose in the virtual world. Firewalls monitor and control all network traffic, both incoming and outgoing. They essentially filter all data and prevent access to suspicious networks. A firewall can come in the form of software that you download onto a single device or physical hardware that can protect many devices.

You can imagine a firewall as a bouncer at an exclusive club. The bouncer has an extensive guest list and thoroughly checks everyone trying to enter. If someone who isn’t on the list attempts to enter, the bouncer doesn’t allow them in. 

A firewall works in the same way. It examines all data trying to enter or leave your network and blocks anything suspicious or unauthorized.

Firewalls can also be used to block unauthorized users from accessing company data and prevent employees from visiting unauthorized sites on work devices.

7. Restrict employee access to sensitive data

One of the simplest ways to prevent a data breach caused by an employee’s mistake or error is to heavily restrict access to sensitive information. Only allow employees who absolutely need access to do their job to view sensitive data.

For example, a banking customer support agent needs to view a customer’s personal information (phone number, address, bank account number, etc.), but a marketing manager does not need access to this sensitive data to perform their daily duties.

On the other hand, a marketing manager may need access to customer behavior analytics and performance data to create targeted strategies, which is sensitive data that is not necessary for the customer support worker.

8. Delete and destroy nonessential data

To say that there is an excess of data in the world is an understatement. By 2025, there is going to be an estimated 180 zettabytes of digital data stored in the world (one zettabyte is equal to 1 trillion gigabytes), which is a mind-boggling number.

Companies tend to hold on to a lot of unnecessary data, so one excellent way to prevent a data breach is to cut down on the data you are storing in the first place. After all, the more data your company stores, the bigger the target on your back is to cybercriminals.

You can significantly reduce the volume of sensitive information at risk by regularly cleaning out data that is no longer needed. This includes outdated customer information, old transaction records, or unused account details.

That said, it’s also important to understand that you can’t simply delete any data your company stores. The GDPR, HIPAA, or other industry-specific standards heavily regulate data storage and deletion.

For example, there are strict rules and laws regulating the retention of financial transaction records. The Sarbanes-Oxley Act (SOX) requires companies to retain financial records for at least seven years. Deleting them before this timeframe could lead to significant legal and financial penalties. Therefore, it is incredibly important to be careful what data you delete and what data you keep on file.

9. Regularly back up important data

Backing up your data may not directly prevent a data breach from occurring, but it can be a saving grace if a cybercriminal deletes or steals sensitive information.

Imagine a scenario in which a cybercriminal hacks into your system and deletes your entire customer database. If this information is not backed up, the attack could be crippling for your business. Beyond the consequences of the data breach itself, you’ll also have to deal with losing all of your customer information.

That said, if you regularly back up your database, you bypass this issue entirely as a copy of the data is saved on the cloud.

10. Train employees on best practices

Training employees on cyber hygiene and security awareness can dramatically decrease your company’s risk of a data breach. In fact, data shows that cybersecurity training can reduce the risk of a security breach by more than 70%!

Many data breaches occur due to employee mistakes or a simple lack of knowledge when it comes to common phishing or social engineering attempts. Here are some important elements to include in your cybersecurity training programs:

  • Inform employees on how to recognize, avoid, and report phishing attempts.
  • Educate employees on why cyber hygiene is important and the risks that cybersecurity threats pose.
  • Establish an incident reporting protocol and ensure employees understand what steps to take if they suspect a data breach has occurred.
  • Create strict internal procedures and guidelines for handling, storing, and transferring sensitive information.
  • Educate employees on safe working habits when working remotely, such as using VPNs, avoiding unsecured networks, and using strong passwords/MFA.

11. Use network segmentation

Another common data breach prevention method is to use network segmentation, which involves dividing your larger network into smaller, isolated sub-networks.

This approach ensures that if one segment of your network is compromised, the attacker cannot easily move to other parts of the network. Network segmentation significantly minimizes the impact of data breaches and limits the amount of sensitive data cybercriminals can access during a breach. 

12. Have a response plan ready

Unfortunately, in this day and age, data breaches and cyberattacks are nearly inevitable, which is why IT teams and businesses should have risk management and response plans prepared if a data breach occurs.

A well-structured response plan ensures that you can act quickly to contain the breach, mitigate damage, and notify affected parties. We recommend testing and rehearsing the plan to work out any kinks and updating where necessary. Doing so ensures everyone knows their role and can respond effectively in a crisis.

13. Regularly audit and update your security systems

One of the most effective ways to determine if your security system is airtight and can protect against data breaches is to put it to the test. In many cases, it can be difficult to fully understand your own cybersecurity system’s vulnerabilities until it is too late. So, many companies hire “ethical” hackers to test their networks for flaws or “penetrable” defenses.

To properly audit your security system, you can hire an ethical hacker to perform a penetration test — it’s essentially a simulation of a cyberattack. During a penetration test, the hacker will attempt to hack into the system with various common cyberattack methods. The ethical hacker may even send phishing emails to employees to test their knowledge and ability to avoid social engineering attempts.

This allows your company to uncover and patch weaknesses in your security system before an attack takes place.

14. Implement endpoint protection

Finishing off our list of top ways to prevent a data breach is endpoint protection, which safeguards devices from threats. In the computer world, an “endpoint” is any device that connects to a computer network and exchanges data. This can include mobile phones, computers, laptops, printers, and “Internet of Things” devices, such as appliances controlled remotely from your smartphone, fitness trackers, and connected cars.

Endpoints account for up to 70% of all entry points of successful data breaches and 90% of all cyberattacks. So, it is definitely important to ensure endpoints are not left out in your security efforts.

Endpoint protection ensures that all endpoints on your network are monitored and secured against malware, ransomware, and other malicious attacks. The exact types of protections used vary, but these solutions often include antivirus software, real-time threat detection, and automated patch management.

What are the main causes of a data breach?

There are quite a few things that can cause a data breach to occur. While the most obvious causes are cyberattacks and weak security systems, most incidents are actually relatively preventable and occur due to employee errors.

Business owners who want to prevent data breaches will need to familiarize themselves with these tactics and take the necessary precautions to avoid becoming yet another victim of cybercrime. Let’s discuss these tactics and what you can do to protect your data.

Insider threats

Nearly three out of four data breaches occur due to an insider threat. Insider threats can be broken down into two main categories:

  • Intentional threats: Data breaches that stem from malicious intent from insiders. Employees use their security privileges to steal information, hack into or sabotage systems, etc.
  • Non-intentional threats: This is when an employee does not intentionally cause the data breach due to negligence, configuration errors, or lack of knowledge regarding security protocol.

There are many ways an employee can accidentally cause a data breach. For example, a customer support agent may accidentally send a confidential document to the wrong person. Another simple mistake that can lead to a data breach is sharing your screen during a meeting when you have sensitive files open on your computer, disclosing restricted information to people without proper access.

Weak or stolen passwords

In many cases, cybercriminals don’t need to work hard to compromise your data — they only need an employee to be careless with their credentials. This can happen if someone uses a weak password that is easy to guess or keep their passwords in an accessible, unsecured location — either physically or digitally. Employees should never physically write down their login details on sticky notes or paper and should instead use secure password managers to store all their log-ins.

Phishing attacks

Phishing is a form of social engineering in which cybercriminals trick employees into giving them restricted information such as login credentials, bank accounts, or credit card numbers. 

These schemes have become more elaborate and harder to detect in recent years. The basic principle of phishing is that cybercriminals mask themselves as legitimate employees or executives within the company or a partner company. The initial contact for phishing is generally done through email or SMS. The attacker will then create a sense of urgency, stating that your account is being hacked or there is a major security threat within the company and ask you to provide them with personal or sensitive information such as your login details. 

Proper training is key for preventing phishing attacks. If you train employees to recognize phishing and report attempts, you’ll significantly reduce the risk of a phishing-related data breach.

Ransomware attacks

Another common cause of a data breach is ransomware, which is a sophisticated type of malware that blocks internal systems, networks, and devices until you pay a ransom fee to the attacker.

The best way to prevent data breaches caused by ransomware is to constantly update your anti-malware software and firewalls. Antivirus software is the first line of defense and typically prevents the majority of attacks. If an attack manages to get through antivirus software, it is important to have a solid data backup policy to protect sensitive information.

Additionally, as ransomware attacks often rely on human error to be successful, employee training and education are once again essential components of keeping your data safe. 

Types of data targeted in data breaches

Person looking at paper

The first step towards keeping your sensitive data safe is identifying what data is “sensitive” and what kind of information cybercriminals will target. 

When it comes to sensitive data, there are two main categories:

  • Nonpublic personal information (NPI)
  • Personally identifiable information (PII) 

Let’s take a look at some of the differences between the two.

Personally identifiable information (PII)

PII is essentially any information that could be used to identify a specific person. This can be publicly known or non-publicly known information.

PII encompasses all personal data, including:

  • Web aliases and nicknames
  • Unique personal identifiers
  • IP address
  • Email address
  • Account names
  • Nonpublic personal property records
  • Biometric information
  • Any internet activity
  • GPS information
  • Data related to employment and education

Nonpublic personal information (NPI)

NPI is any personally identifiable information provided by a consumer to a company that is not publicly known. It is a subset of PII that is heavily regulated by the FTC. This information, while commonly collected from customers by companies, is often more sensitive than general PII and can lead to more drastic consequences if leaked.

NPI includes the following user/client information:

  • Personal addresses
  • Employment history and income
  • Social Security numbers
  • Driver’s license numbers
  • Bank account numbers
  • Credit card and payment history
  • Loans or mortgage information
  • Court records
  • Medical records

How to identify and store sensitive data

As you can see, a considerable percentage of the information a company collects from its users needs to be protected, as it’s potentially valuable to cybercriminals. Here is our step-by-step walkthrough of how to identify sensitive information and protect it from prying eyes.

Step 1: Understand where your sensitive data is stored

Once you’ve compiled a list of what data needs to be protected, the next step is to identify where that information is stored, transmitted, and processed so you can properly protect it.

Step 2: Organize sensitive files

Locating and categorizing all the folders, logs, files, virtual machines, and on-premise servers that are involved with or store sensitive information will help you create a plan for properly protecting from a data breach.

Step 3: Assess user access levels

Determine who has access to your company’s sensitive data. While this may seem like a straightforward task, keep in mind that there are several “levels” of users that will have access to varying degrees of confidential data.

Not only can your “standard” users (employees, contractors, etc.) be compromised, but you also need to consider what could happen if users with special privileges — such as network administrators — are successfully targeted by cybercriminals.

Step 4: Log and secure all devices used for data access

You must also account for every device that each user will use to access your networks, as they can be used as a Trojan horse to breach your systems. Almost any device your company uses can make your business vulnerable: personal computers, smartphones, laptops, phones, printers, IoT tools, hubs, modems, network adapters, and more. Cybercriminals will look for exposed devices with weak security measures so they can gain access to your data. This means that you need to know what devices your employees use so that you can secure them.

Once you are able to identify what data you’re trying to protect, where it’s stored and processed, and who has access to it, you’ll be able to better implement effective policies and methods to prevent data breaches.

How insurance can help

Person smiling

Given how costly and frequent data breaches are, most businesses should consider investing in a cyber insurance policy with a data breach coverage inclusion. A cyber liability insurance policy will enable your businesses to transfer the potential risks and costs associated with data breaches and recovery from them to the insurer.

Cyber insurance is a crucial part of any data breach response for two reasons: 

  • It covers your losses caused by the breach.
  • It gives you access to better cybersecurity experts provided by the insurer before any breach occurs. 

Each policy will essentially have two types of coverage: first-party and third-party. 

First-party cyber liability insurance will pay for the losses your company suffers due to a data breach, and help you get your systems and networks back online. 

Third-party cyber insurance will cover defense costs and settlements in the event that someone outside your business is affected by the breach and decides to sue you for damages.

A cyber insurance policy can be seen as the last line of defense that can turn a disastrous data breach into a minor inconvenience.

Want to learn more about our coverages?

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  • 2024 Cyber Risk Index shows coverage confidence increase, even as startups fear AI’s shadow
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  • 5 professional liability claims examples: Real-world cases and lessons learned
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