As most everyone knows by now, one of the single largest data breaches in history was disclosed last week by the credit reporting giant, Equifax. While most people are rightly focused on the immediate impacts of this breach – personal fraud, credit and identity protections, waivers of right to sue, class-action lawsuits, etc. – few have considered the longer term implications of this event. So, here are three predictions of how the cybersecurity world will change in light of this monumental event.
1. Bankruptcy looms ahead for Equifax
In the last 4 business days since the company disclosed the data breach, Equifax has suffered a $5.3 billion loss in market capitalisation which represents almost a third of the company's total value.
When considering an estimate of the potential costs associated with the data breach (based on the 2017 IBM/Ponemon Institute Cost of Data Breach Study), Equifax faces a potential loss of $20.2 billion which currently exceeds their total market value by $8.3 billion.
Also, the company currently faces more than 23 class-action lawsuits with at least one seeking more than $70 billion in damages. The death spiral will soon take on greater momentum when executives are required to testify before Congress and criminally investigated for potential insider trading related to the delayed disclosure of the data breach.
Equifax will ultimately be acquired out of bankruptcy by one of the remaining two credit reporting companies – TransUnion or Experian.
2. Social Security Number will be replaced by a more secure National ID
The use of Social Security Numbers (SSN) as the primary authentication device for US citizens will be eliminated. What will replace the SSN is anyone's guess, but it can no longer serve in this capacity since at least half of the nation's primary method of authentication has been compromised. Perhaps the US will follow Estonia's lead in creating a true electronic national ID?
3. A federal cybersecurity act will be passed quickly
Attempts at passing federal legislation over cybersecurity have been futile in the past, but all of that will change. Similar to what happened in the aftermath of the Enron and Worldcom accounting frauds, broad reaching legislation will be crafted and passed much like the Sarbanes Oxley Act of 2002.
This will occur because the impact of the Equifax breach is being felt by every single American (as well as some Canadians and Brits). Similar to the Sarbanes-Oxley requirement on the certification of internal control over financial reporting, CEOs and other executives will be required to disclose any material data breach upon discovery and personally certify to the effectiveness of their internal control over data security.