(Published in Manila Standard Today under the Greenlight Column, June 20, 2011)
More than 360,000 of Citigroup Inc.’s U.S. credit card customers’ data was breached by hackers according to a statement of the bank posted in its website. This is the latest of the string of large-scale hacking and data breach against high-profile companies, and the cost to them is becoming staggering.
In April, Sony’s Playstation Network was attacked by hackers which affected more than 100 million online accounts. Sony expects it will cost it ¥14 billion (US$170 million) this financial year.
Earlier this month, Google blamed China of trying to hack the accounts of several hundred of Gmail account holders that included U.S. government officials, journalists, and Chinese human rights activists.
These statements from Google could seriously hurt its business. In fact last year, the Obama administration took up Google's complaints about hacking and censorship from China. Afterwards, Google partially pulled out of China, which resulted to a loss in market share to rival Baidu in China's huge Internet market.
In Citigroup’s case, letters were sent starting June 3 to people affected, and 217,657 customers have also been sent new cards, costing the company unforeseen expenditures and possible reduction in credit card use among its customers.
How hackers work
Hacking refers to various activities that include breaking passwords, writing and releasing viruses and worms, denial of service attacks, accessing restricted electronic information owned by others, or any other activities that involves accessing a computing system without the right authorization.
Hackers will release a program into the network which will record everything that is going on. After filling itself with data such as personal and financial information, the program then sends this data back to a server. The hacker, in most cases will take that data and sell it to someone interested. It is those people who but this data that will inflict more harm to the aggrieved company.
Business cost of hacking
According to data security experts, hacking and other malicious computer viruses are costing businesses globally more than $1 trillion each year. This only includes the cost of data loss and cleaning up the breach, and does not include the reparations to affected customers.
But the biggest cost of hacking, which is more often underestimated, is the loss of trust of customers. This results to the reduction in the use of a product or service, if not, the total loss of the customer himself or herself.
For instance, if you used your credit card at a certain restaurant and the card number data stolen and used for some malicious purpose a week later. Most likely you would suspect the restaurant of stealing your card number and would not patronize it anymore, even if the problem is not directly linked to the restaurant.
That’s why Sony and Citigroup are offering reparations to affected customers to avoid losing them altogether.
Protecting your company
The most important thing that your company can do is to invest in security. There are a lot of security solutions available in the market now that detects and stops potential threats to your company’s electronic data.
Your employees should also be well trained in basic security techniques in using and accessing company data, especially though the Internet. Your company also needs to have well trained professionals that run your IT system.
The proverbial “an ounce of prevention is better that a pound of cure” holds true when it comes protecting your companies electronic data.
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Reynaldo C. Lugtu Jr. teaches strategy, management and marketing courses in the MBA Program of De La Salle University, Graduate School of Business. He may be e-mailed at rlugtu2002@yahoo.com, or visit his blog at http://rlugtu.blogspot.com.
More than 360,000 of Citigroup Inc.’s U.S. credit card customers’ data was breached by hackers according to a statement of the bank posted in its website. This is the latest of the string of large-scale hacking and data breach against high-profile companies, and the cost to them is becoming staggering.
In April, Sony’s Playstation Network was attacked by hackers which affected more than 100 million online accounts. Sony expects it will cost it ¥14 billion (US$170 million) this financial year.
Earlier this month, Google blamed China of trying to hack the accounts of several hundred of Gmail account holders that included U.S. government officials, journalists, and Chinese human rights activists.
These statements from Google could seriously hurt its business. In fact last year, the Obama administration took up Google's complaints about hacking and censorship from China. Afterwards, Google partially pulled out of China, which resulted to a loss in market share to rival Baidu in China's huge Internet market.
In Citigroup’s case, letters were sent starting June 3 to people affected, and 217,657 customers have also been sent new cards, costing the company unforeseen expenditures and possible reduction in credit card use among its customers.
How hackers work
Hacking refers to various activities that include breaking passwords, writing and releasing viruses and worms, denial of service attacks, accessing restricted electronic information owned by others, or any other activities that involves accessing a computing system without the right authorization.
Hackers will release a program into the network which will record everything that is going on. After filling itself with data such as personal and financial information, the program then sends this data back to a server. The hacker, in most cases will take that data and sell it to someone interested. It is those people who but this data that will inflict more harm to the aggrieved company.
Business cost of hacking
According to data security experts, hacking and other malicious computer viruses are costing businesses globally more than $1 trillion each year. This only includes the cost of data loss and cleaning up the breach, and does not include the reparations to affected customers.
But the biggest cost of hacking, which is more often underestimated, is the loss of trust of customers. This results to the reduction in the use of a product or service, if not, the total loss of the customer himself or herself.
For instance, if you used your credit card at a certain restaurant and the card number data stolen and used for some malicious purpose a week later. Most likely you would suspect the restaurant of stealing your card number and would not patronize it anymore, even if the problem is not directly linked to the restaurant.
That’s why Sony and Citigroup are offering reparations to affected customers to avoid losing them altogether.
Protecting your company
The most important thing that your company can do is to invest in security. There are a lot of security solutions available in the market now that detects and stops potential threats to your company’s electronic data.
Your employees should also be well trained in basic security techniques in using and accessing company data, especially though the Internet. Your company also needs to have well trained professionals that run your IT system.
The proverbial “an ounce of prevention is better that a pound of cure” holds true when it comes protecting your companies electronic data.
-------------------------------
Reynaldo C. Lugtu Jr. teaches strategy, management and marketing courses in the MBA Program of De La Salle University, Graduate School of Business. He may be e-mailed at rlugtu2002@yahoo.com, or visit his blog at http://rlugtu.blogspot.com.
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