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Critical Considerations for Sensitive Information in a Data Breach

Jan 18, 2024

Everyone has a legal and moral duty to collect and manage data responsibly. Mishandling sensitive data can pose significant risks to individuals, organizations, and even society as a whole. One of the greatest potential risks associated with mishandling sensitive data is a data breach.

Data breach is a rising liability for large corporations. In 2023, the global average data breach cost was $4.45M per breach, while the U.S. average was $9.44M per breach, according to IBM’s annual Cost of a Data Breach Report. Data breaches are extremely hard to prevent, as hackers frequently target individuals who inadvertently provide them access to sensitive information. Additional risks associated with a data breach include:

  • Identity theft. Stolen personal information, such as Social Security numbers, credit card details, or addresses, can be used to commit identity theft. Criminals may use this information to open fraudulent accounts, make unauthorized purchases, or engage in other criminal activities. The Federal Trade Commission (FTC) reported receiving over 1 million reports of identity theft in 2022.
  • Financial loss. Mishandling sensitive financial data can lead to significant financial losses for individuals and organizations. Businesses may also incur financial damages due to the costs associated with investigating and mitigating the breach, implementing security improvements, compensating affected individuals, and dealing with legal proceedings. According to IBM’s report, despite the spiraling costs of a data breach, more than half of all breached organizations plan to pass the costs onto consumers rather than boost security investments.
  • Regulatory non-compliance. All U.S. states, the District of Columbia, Puerto Rico, and the Virgin Islands have approved data breach laws requiring notification of security breaches involving personal information. Mishandling sensitive data may lead to non-compliance with these laws, resulting in potential legal consequences and fines.
  • Espionage and cyber warfare. Malicious actors may target sensitive data for espionage purposes or cyber warfare, leading to potential national security risks. According to the Center for Strategic and International Studies (CSIS), Russian cyberattacks on military command and control centers continue to be a critical aspect of the war in Ukraine.
  • Loss of competitive advantage. Businesses often rely on proprietary information and trade secrets for a competitive edge. Mishandling such information can lead to a loss of competitive advantage and damage market position. Customers may lose trust in a company for failing to protect sensitive information, and rebuilding trust can be a lengthy and challenging process.
  • Loss of privacy. Mishandling personal data can infringe on individuals’ privacy rights, and this erosion of privacy can have significant social and ethical implications. A data breach leads to losing control over one’s personal information, and individuals feel helpless as their data is disseminated without their consent.
  • Operational disruption. Data breaches can disrupt normal business operations, negatively affect productivity, and require costly recovery efforts. According to Infosecurity Magazine, publicly traded companies suffered an average drop of 7.5 percent in their stock values after a data breach, and it took an average of 46 days for stock prices to return to pre-breach levels.
  • Reputational damage. Data breaches can also cause irreparable reputational damage, especially for organizations that work in the legal technology and financial spaces, e.g., law firms, eDiscovery software and service providers, and financial institutions. Loss of trust from customers, partners, and the public can have long-lasting consequences and may impact business relationships.

Protection from data breaches requires stringent security protocols, technology, and continual education of employees on data handling. When a breach occurs, the clock starts ticking from the moment it is discovered. In addition, companies must comply with costly breach mitigation and notification procedures, often in compressed time frames.

Using eDiscovery Tech to Respond to a Data Breach

Organizations increasingly use technology solutions initially designed for eDiscovery as part of their data breach response plan. AI-powered eDiscovery systems can provide better context for prioritization and response to data security alerts to facilitate a faster response to incidents and identify root causes to lessen vulnerabilities and prevent future issues. AI can also be a force multiplier, helping teams automate time-consuming activities and streamline containment and response.

E-Discovery specialists are well positioned to help with the review and notification process following data breaches using some of the tools and technologies already in place for eDiscovery review. In addition, new purpose-built data breach review tools have been created to assist with the breach review and notification process. These tools focus on identifying PII and sensitive information and the custodians they belong to and preparing a notification report for affected individuals.

Data breaches may be inevitable. However, the ability to respond with eDiscovery software that utilizes AI and automation can help organizations shorten response times, comply with tight reporting deadlines, maintain an audit trail, and save money as well.

CDS provides a full range of advisory services related to data breaches. To discuss how we can streamline your organization’s response, contact us at  for a consultation today.

About the Author

Nicole Guyer

Nicole Guyer

As Client Director at CDS, Nicole advises attorneys and ediscovery practitioners on managing electronic data through the EDRM lifecycle. She is passionate about developing sophisticated workflows and takes a hands-on consultative approach. She draws on more than a decade of eDiscovery experience to advise clients on advanced analytics and litigation support technologies to efficiently investigate data, cull data volumes and implement cost-saving solutions. Nicole has also managed large-scale document review projects and assisted with privilege reviews and privilege log creation. She is a Relativity Certified Administrator.