Firms Adjust to Hacks

In the past, companies were typically caught off guard when a data security breach occurred and responses were often flat-footed, requiring updates and further clarifications to concerned customers. Now an industry of experts -- including lawyers, public-relations specialists and forensic investigators -- has emerged to help companies determine what to disclose and how to reassure victims.

Executives outside the computer room are also more aware of the threat posed by hacking, leading companies to formulate breach-response plans before an incident ever occurs. The shift comes as hacking intrusions become more commonplace and experience shows that revealing an incident won't necessarily cause lasting damage to a brand. In fact, if a breach is handled well, "customer loyalty and your brand can actually improve," said Lori Nugent, an attorney who specializes in breaches at Wilson Elser Moskowitz Edelman & Dicker LLP.