The Top 5 Causes of Data Loss in Small Financial Firms

Data loss is a serious issue for all businesses that use any type of computing system – and ones who don’t fit that bill are few and far between. Company data is to companies what gas is to cars, and without it, they would not be able to run.

Data loss is a major problem for businesses of all sizes, and it results in the loss of time, money, and important files. Much of this information is essential to keeping the business running smoothly, and because it is often irreplaceable, losing it can cause serious delays in your business operations or even complete closure.

This is a big price to pay, considering protecting your data can be far less expensive.

Some of the most vulnerable businesses are those in the financial sector. Banks and financial services possess a lot of highly sensitive information, such as credit card numbers, social security numbers, birthdates, addresses, and phone numbers.

Through cyberattacks and unavoidable natural disasters, sensitive data can be lost in an instant.

For small financial firms, business owners must know how to prevent a data breach as well as how to protect against intentional data loss and accidental deletions alike.

Here, we will look at the five most common causes of data loss, as well as some tips on data protection and how to restore lost data to keep your business running smoothly.

Cyberattacks Using Ransomware or Malware

Hackers who use computer viruses and malware can gain unauthorized access to your computer system, where they could steal and delete important data. With sufficient access, they can even damage entire server and network systems.

In recent years, cybersecurity threats have become a much more common problem for financial institutions. Research shows that up to 75% of all data breaches are a result of hacking and malware. The need for comprehensive cybersecurity measures is now essential.

Financial services rank fairly low in terms of the number of data breaches they may face – at 7% of all breaches in 2019. This is compared to 42% for businesses and 36% for healthcare firms. But this seemingly low 7% of breaches resulted in 62% of all lost records.

According to Anarug Kahol, the CTO of Bitglass, “Hacking and malware are leading the charge against financial services, and the costs associated with breaches are growing.”

The cost per mega breach (those affecting 100M+ peoples) in financial services has also increased and is topped only by healthcare breaches.

cost of a data breach

One of the most common methods hackers gain access to your computers is through malware hidden in an email attachment, usually sent via a fake official address. Unaware receivers open attachments that download or execute malicious software onto the device.

These email scams also advertise fake software for free downloads online, usually disguised as antivirus software.

Other lesser-known methods include hijacked ads that place intrusive code onto legitimate websites. Cybercriminals do this by buying ads, then corrupting them, or by hijacking an ad server or ad account.

If your servers have inadequate security measures and firewalls, your computers are at risk. Simple, shared passwords also pose a threat to your organization’s computer networks. Once hackers have access to your computer, they can capture usernames and passwords that have been typed on the keyboard.

The riskiest part for a business is that hackers can send malicious malware via company emails once they have access to one employee’s computer. This means all of your employees could fall victim to the malicious emails, as they would assume they are opening an email from a colleague.
Malware also poses a major threat to financial institutions, as it can copy traffic moving across your network, including personal and financial information.

Prevent a Malware Data Breach

affected by a malware data breach

Developing good data protection against malware attacks can be very frustrating, as you face a threat that is constantly evolving. Hackers are always creating new ways to infiltrate your systems and get around being blocked by your antivirus software.

Here are some of the most basic ways to protect your computers from antiviruses.

      • Install and update antivirus software.
      • Use an updated firewall.
      • Use complex passwords for all employees.
      • Regularly update your operating systems, apps, and browsers.
      • Instruct all employees to never open spam messages.
      • Switch off your computer when not in use for long periods.
      • Protect your network by using a secure, encrypted setup.
      • Use two-factor authentication when accessing data online.
      • Encrypt your hard drives, USB devices, and web traffic.

Data loss prevention does not have to be stressful. By engaging an expert cybersecurity firm, you can ensure your business’s safety. For example, you can get antivirus software that updates automatically every day. The software should be able to detect and remove signs of malware, manage your web applications, and provide hacker-proof website security.

Hardware Failure

hardware failure

Research shows that 35% of all data loss is caused by hardware failures or malfunctions, usually caused when computer hard drives crash. This is the highest percentage, closely followed by human error and software failure.

Computers – like any other machine – wear out over time, and hard drives will eventually stop working.

These crashes are caused by mechanical issues, such as overheating (60%) and physical damage due to jostling or dropping (40%).
Liquid spills also contribute to damaged hard drives that could potentially make the computer short circuit.

Look out for these signs that your hard drive could be failing:

      • Frequent hard drive crashes
      • Continuously slow processing speeds
      • Frequent computer freezes
      • Clicking or grinding sounds
      • Your computer is unusually hot
      • Hard drive has issues when booting up
      • Files do not open properly

If you notice any of these signs, you need to act quickly, or you may lose valuable data due to a hardware crash.

How to Protect Your Hard Drives

protecting hard drives

To prevent hardware malfunctions, make sure all people with access to your devices use the computers appropriately, and keep the devices away from excessive dust.

Regularly backing up your hard drive on an external hard drive or a cloud storage service will ensure you still have access to lost files in the event of a crisis.

Human Error

Humans are prone to error, and employees at all levels can make mistakes. Some mistakes, however, have dire consequences for businesses when they involve losing data.

Files needed for the business’s day-to-day functions could be accidentally deleted or overwritten.

According to a 2018 study by Netwrix, employees – especially among IT members and mid-level managers – account for 50% of data loss.

Here are some common ways human error can lead to a lack of proper cybersecurity:

      • Employees not following standard operating procedures for backing up files.
      • Improper maintenance routines, such as failing to install patches or not updating software packages with security-related fixes

Other times, laptop theft means your sensitive data can fall into the wrong hands. This is very common, and research shows a laptop is stolen every 53 seconds, so keep all your computers safe.

Minimize the Risk of Human Error

The only way to counter this risk is with proper training to make sure all employees understand how to use data backups. They need to know if there is an automatic data backup system, as well as how they can manually back up documents.

Another way to make sure files are not accidentally deleted due to human error is to automate work processes, along with using file recovery software. These tools scan your computers to identify and recover lost data.

You should also control employee access to sensitive data as a further measure to protect from accidental or intentional data loss.

Natural Disasters or Emergency Events

data loss after huricane katrina

Natural disasters such as fires, flooding, or even hurricanes and tornadoes can destroy computers and cause irreparable damage to your business. It may seem like an unlikely event, but especially due to the changing climate, businesses need to be prepared.

Approximately between 40% – 60% of all small businesses do not reopen after a natural disaster, and up to 90% fail if not reopened within five days.
Along with disasters, emergency events may result in power failures followed by power surges.

Whatever the reason, a surge as a result of power outages may damage internal components and cause you to lose data.

If your servers are sending information and there is a sudden loss of power, it creates a small imperfection on the disk. These imperfections accumulate and can lead to a crash and destroy your devices.

Likewise, if a server or data center goes down due to a power outage, backup files may not be accessible.

Prevent Data Loss from Natural Disasters and Emergencies

Before data loss occurs as a result of a natural disaster, combat it by making sure your data is backed up to cloud storage services.
For on-site infrastructure, servers should be in a secure location with up-to-date flood prevention and fire suppression measures.

Even basic flood sensors or fire alarms can play a big role in data loss prevention.

If your area is prone to frequent power outages, reduce the cost of downtime by installing backup generators and surge protectors on your premises.
This is especially important for financial services that need to be accessible to clients at all times. You will need to implement a disaster recovery plan or risk facing months of closure and loss of business.

By performing automated test backups daily, your information is constantly updated, which can be important – disasters do not often give prior notice.

Even in the face of unavoidable disasters, reducing the risk of data loss can ensure your business is back up and running as soon as possible. Triada Network recovery systems are the best way to ensure that no data is lost in emergency situations.

Software Malfunction

One of the most common – and avoidable – causes of data loss is improper shutdowns. Suddenly shutting down your computer without following the proper procedures can affect the reboot operating software.

For example, you or an employee may be communicating with another system via a network cable, or even transferring files. If the transmitting computer is suddenly turned off, the computer on the receiving end will not be able to complete the transfer. It will automatically try to fill in the gaps and receive it even if incomplete.

This may corrupt your existing data, delete your progress, and result in you losing data, as the corrupted files become unusable or inoperable. Inevitably, there will be some data loss, and you will have to spend time and money to try to recover it.

Avoid Software Corruption

Luckily, most of the factors that cause file corruption are preventable. Employees should be trained in proper powering down processes and encouraged to shut down any running programs first. They also need to make sure that diagnostic programs do not interrupt running software processes.

Providing a reliable backup system has proven to be the best way to protect all of your business’s original data. Without proper data storage facilities, data recovery may be impossible.

Keep Your Financial Business Safe from Data Loss

When looking at ways to protect your business from data loss, there is one activity that we’ve mentioned throughout: data backup.

We cannot emphasize the importance of backups enough, but looking at the bigger picture, backups are useless without the ability to recover them.

With the advent of affordable, scalable cloud services, backing up, recovering, and restoring lost data has never been easier.

By providing your business with a virtual desktop that is accessible from anywhere, you will never need expensive servers that will require extra office space plus IT support.

Even better, with guaranteed 24/7 uptime and secure access, you and your employees have the freedom to work remotely from anywhere in the world at any time!

triadanet testimonial

Regardless of whether the loss is due to human error or unsavory hackers, by having mechanisms that ensure complete data storage, you can rest easy knowing your information is safe.

Triada Networks provide an all-around solution to all of your data storage and recovery needs. Through years of experience, we have honed the skill of keeping businesses running.

There is no time like the present to avert a future catastrophe! Simply schedule a free consultation and take the first step to prevent disruptions due to data loss.

Keep Your Small Business Safe!

Triada Networks can be your partner that will provide long-term protection! We have more than twenty years of experience working with financial firms, so you can be assured that we’ll take care of your every need.
Raffi Jamgotchian Hedge Fun Cyber Security Expert

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