When a Departing Employee Became a Data Breach

Discover how Crisis IQ Partners assisted a company in mitigating a significant data breach caused by a departing employee, preventing substantial reputational and financial damage.

The challenge: An insider threat

A $50M AUM wealth management firm in the Southeast had grown rapidly but hadn't updated their crisis management protocols in over 5 years. Their cybersecurity plan was outdated, and they had no clear procedures for employee off-boarding or data breach response.

The Crisis Event

During a routine IT audit, the firm discovered that a recently departed financial advisor had downloaded 847 client records to a personal device three weeks before resignation—including names, SSNs, account numbers, and financial portfolios.

Immediate risks:

→ SEC and state regulatory notification requirements (24-72 hour deadlines)
→ Potential $500K+ in regulatory penalties for delayed notification
→ Client trust erosion and mass exodus to competitors
→ Litigation exposure from affected clients
→ Reputation damage in a relationship-driven industry

 

When interviewed, the CEO admitted:
“I was so focused on growth that I failed to protect our most valuable assets: our data and our customer's trust.”

What Crisis IQ Provided 

Working with Crisis IQ Partners' framework (implemented 6 months prior during a Crisis Strategy engagement):

Hour 1-2:

  • Activated crisis response team via established protocols
  • Engaged pre-vetted forensic IT firm to assess full scope
  • Notified legal counsel and insurance carrier
  • Began evidence preservation

Hour 2-24:

  • Completed breach risk assessment
  • Filed regulatory notifications within required timeframes
  • Prepared and legal-reviewed client notification letters
  • Arranged credit monitoring services for all affected clients

Day 2-7:

  • Personally called all 847 affected clients (not just mass email)
  • Held team briefings using pre-approved talking points
  • Implemented enhanced data security measures
  • Coordinated with regulators on investigation cooperation

Measurable Results

→ Zero clients left the firm (industry average: 20-30% attrition post-breach)
→ Zero regulatory penalties due to timely, compliant notification
→ $180K in crisis costs vs. projected $1.5M+ if unprepared
→ 3 new client referrals during recovery period (clients impressed by transparency)
→ 92% client satisfaction in post-incident survey

Key takeaway: A robust data security plan is your best insurance against insider threats

What could have been a firm-ending crisis became a demonstration of competence and care. The firm's transparent, rapid response actually strengthened client relationships. Insurance covered forensic investigation costs. The firm now maintains our Advisory Support retainer to ensure ongoing readiness.

"The $15,000 crisis planning investment we made 6 months earlier prevented $1.5M in losses and saved our firm. The ROI was literally 10,000%." — Managing Partner

Crisis preparedness isn't about preventing every incident. It's about responding so effectively that the incident doesn't define you.

 

Contact us today to learn how Crisis IQ Partners can help you build a resilient data security strategy.