The State of Third-Party Insurance Verification – Research Report
February 27, 2018
Modern startups are awash in information, from real-time customer insights collected via mobile applications to employee data received through online portals.
Founders are constantly making decisions about where to invest, when to hire, how to hire and, most importantly, how to grow. In the rush to cultivate clients and consider business scalability, many startups may fail to truly appreciate the immense responsibility that comes with gathering and storing data in the current digital environment, a place where cybercriminals roam and users are painfully aware of the risks that come with sharing private information online.
With this state of affairs in mind, startup founders would be wise to evaluate how they manage data privacy by asking these three questions:
1. How can I utilize customer data without assuming risk?
Data collection and storage creates unavoidable risk. One small processing mistake or error in judgment can lay the groundwork for a costly data breach or regulatory noncompliance, which is even more significant when you are a startup.
According to research from IBM and the Ponemon Institute, businesses that suffered breaches last year paid an average of more than $3.6 million in mitigation costs per instance of data loss. As a growing company, the damage a potential breach could have on a new company’s reputation, funding and growth could be truly catastrophic. Unfortunately, no matter how big or small a company is or what controls its teams may have place, breaches are always possible as long as customer data resides on company-controlled servers.
The key to avoiding assumed risk is to build a foundation and policy that minimizes the storage of sensitive data on the company servers. A startup may not have the resources of a more mature company. But by eliminating the handling and management of sensitive personal data through a partnership with the right data management and verification solutions provider, startups can confidently utilize verified personal information without any of the risks traditionally involved.
2. How does poor data management affect the reputation of my brand?
Modern consumers expect businesses to handle their information with the utmost care. When organizations break this trust, the consequences are real.
Public companies that mishandle data see their stock prices drop by an average of 5 percent and experience increases in customer churn of up to 7 percent, as formerly loyal clients depart for more reliable competitors, according to a separate Ponemon Institute study. But while those companies may eventually rebound, startups typically do not have that luxury. When similar breaches play out on a smaller scale in the startup world, startups see loss of brand trust, potential loss of customers, and, perhaps more crucially, investors.
Moreover, if a startup’s mission is to eventually sell their company, a data breach may come back to haunt them financially. In 2017, Verizon reduced the sale price it paid for Yahoo by $350 million to cover the costs associated with their breach. Startups that have suffered from data breaches are susceptible to similar devaluations when it comes time to put themselves on the market.
3. How can I maintain high data privacy standards and grow my enterprise at the same time?
Startups are known for their rapid growth as well as their vulnerability. As they hustle to produce verifiable ROI, any hurdle that breaks their momentum could trip them up irrevocably. Data, for different reasons, is often the source of that friction. If it’s not the liability of storing it, then it’s the challenge of selecting the right data for collection or continually verifying that data at consistent intervals or keeping up with regulatory demands. This is compounded as a startup founder and leadership is prioritizing where to invest limited funds and trying to scale up everything else about their business. Something’s got to give.
That’s why many growing ventures collaborate with trusted partners like Evident. Our powerful platform enables comprehensive, accurate and up-to-date identity and credential verifications without asking your business to hold or handle personal data. Spend more time focusing on growing your business, less time worrying about protecting customer data.