Top Consequences of a Security Breach | Client Portal for Accountants
securing their clients’ data. According to the KPMG 2022 Fraud Outlook, 83% of companies in the Americas were impacted by a cyber attack in the last 12 months. More alarmingly, the same report found that 55% of businesses suffered losses due to a regulatory fine or compliance breach in the same period.
If you have any remote workers on your staff or use online software (this includes something as simple as email), it’s more critical than ever for accountants, attorneys, and other services professionals to make sure their client data is as secure and protected as possible. Otherwise, you may encounter some of the following consequences.
If your clients’ private financial data is compromised, you will have to prove to a court that it is not due to your firm’s negligence. Whether or not this is true, the legal fees could pile up as you attempt to prove your case. If you are found to be guilty (which, if you are exchanging sensitive data through email, could be the case) you’ll incur fines, as well.
When going through the legal process, you won’t just have to pay legal fees. You also have to consider the lost billable hours. Because you’ll have to spend time building your court case, you can lose valuable time that could have otherwise been spent working on your clients’ needs.
If you have not used a secure client portal or other security measures to protect your client data, you could be found to be in violation of your firm’s duty of care, putting you at risk for fines. While we can’t predict the actual amount, we know that courts have become more and more severe with penalties in recent years.
For instance, Equifax lost the financial information of more than 150 million people because the Apache Struts framework was unpatched in a database, forcing a settlement with the FTC of $575-700 million. More recently, T-Mobile had to pay $350 million in settlements due to a data breach that impacted 77 million people in 2021.
While your fines may not be as high as these conglomerates, they could be high enough to force you to lay off some employees or even put your firm out of business. Reduce your risk of potential privacy-related fines by implementing secure sharing systems into your workflows now.
Your firm’s reputation is your greatest sales asset. When it’s damaged, it can be difficult or impossible to restore.
By reputation damage, we don’t just mean embarrassment (though that’s certainly a part of it). More importantly, when your firm’s reputation is damaged, you lose revenue—a lot of it. Your current clients may no longer trust you and decide to take their business elsewhere. And potential clients trying to choose a new firm may choose an alternative option.
Don’t underestimate how quickly you can experience reputational damage. The power of social media means that unhappy clients can leave reviews and comments on your social media pages and share them with their friends.
Theft of Finances
Accounting firms and law firms are among the most popular targets for hackers for a good reason: they’re rife with sensitive client information, like billing data.
However, some hacks aren’t after your client information—they’re after you. Though it isn’t the most likely scenario, it’s always possible that a cybersecurity breach will deplete your bank account. Even though this would get you off the hook regarding client litigation, it could still mean the end of your firm (or at least a significant setback).
Damaged Shareholder and Investor Relations
If your accounting firm is beholden to investors and shareholders, security breaches could put them on edge. Once a data security breach occurs, it’s usually followed by a precipitous drop in the company’s perceived value. Negative press can fuel a “sell now” groupthink, which then escalates—much like an old-fashioned bank run. This is especially true for smaller companies that don’t have the corporate infrastructure or brand recognition to keep things afloat in the wake of an attack.
Investors and shareholders want their money to be safe with a company they feel they can trust. When that trust is lost, reversing the damage can be very difficult.
How to Protect Your Client Data
The good news is that there are plenty of software systems available that are easy to use and keep your client’s data secure. If you’re frequently sharing sensitive documents and client information, consider file-sharing and eSignature software.
To avoid the consequences listed above, it’s crucial to invest in practice management software that can keep your data safe and secure. A client portal provides a single, secure place for clients to share information, receive updates, and engage with your team. All your clients have to do is sign in to their portal to look at past invoices, pay outstanding ones, and even sign documents in just a few clicks.
The only issue that can come up with client portals is that clients have to remember a password. This may be an issue for some clients, which is why you should also offer secure file-sharing options.
Secure file-sharing and eSignature
Secure file-sharing works similarly to client portals, but no passwords are required. Instead, it offers end-to-end encryption, sharing files and links through a connected email account. For added security, you can include other security features like expiring access deadlines, so the client—and any potential bad actors—can only access the document for an allotted time period.
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