Navigating Data Security What manufacturers need to know about cyber protection By Seth Skiles MANAGEMENT The manufacturing sector faces unprecedented challenges in protecting sensitive data, with recent statistics and data breaches painting a sobering picture. According to IBM Security’s Cost of a Data Breach Report 2023, companies now face an average cost of $4.5 million per breach—an all-time high that should grab every executive’s attention. ESSENTIAL FIRST STEPS IN DATA PROTECTION For manufacturers, creating an effective data protection strategy starts with two fundamental components: a breach avoidance plan and a breach response plan. The avoidance plan requires companies to first develop what security professionals call a “data map.” This is a comprehensive inventory of sensitive information and its location within your systems. This critical first step enables companies to determine which laws apply to their operations and to implement appropriate technical safeguards to protect sensitive data. Hackers regularly breach even the most up-to-date security measures so companies should also have a response plan in place for securing data, stopping the breach, and managing communications to affected individuals and other stakeholders. Just as important as making a plan is establishing a person responsible for implementing it. Companies should designate an experienced executive, typically a CIO or CTO, to oversee data security efforts and manage the response to a data breach. UNDERSTANDING THE STAKES The financial impact of a data breach can be far reaching. Lost business expenses alone averaged $1.3 million in 2023, encompassing everything from operational disruptions to customer losses and reputational damage. Companies may also be on the hook for millions of dollars in legal costs. Companies face potential class action lawsuits under state data breach and consumer privacy laws. In addition, multiple regulatory agencies—including the FTC, FDA, SEC, and state attorneys general—can initiate enforcement actions with steep financial penalties. State attorneys general have been particularly aggressive in pursuing data breach cases, as evidenced by investigations into major corporations like Target, Home Depot, JPMorgan Chase, and Zappos.com. 14 / INSIDE RUBBER / 2025 Issue 1
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