Data breaches are no longer a matter of if—they are a matter of when. Whether it’s through phishing attacks, ransomware, or insider threats, unauthorized access to sensitive data can expose businesses to legal risk, reputational damage, and financial loss. Knowing how to respond swiftly and correctly is not optional. It’s a legal and strategic imperative.
If you’re asking, “What should a business do if there is a data breach?” this article walks through the necessary steps—from FTC-recommended response strategies to mandatory actions under Colorado law.
Step One: Confirm and Contain the Breach
The moment a data breach is suspected, your first job is to confirm the incident and contain the damage. According to the Federal Trade Commission (FTC), businesses should begin by assembling a breach response team that includes legal counsel, IT, operations, HR, and public relations. These professionals will help manage the situation from all necessary angles.
Your IT team should immediately secure all systems, change access credentials, and preserve evidence. If malware or unauthorized access is detected, take affected equipment offline but do not turn it off until forensic experts are consulted. Every minute counts.
Mini checklist:
- Activate your internal incident response team
- Stop additional data loss
- Document everything: when, how, and where the breach occurred
- Preserve logs and digital evidence for investigators
Step Two: Investigate and Assess the Scope
The next move is a full-scale internal investigation. Determine what data was compromised, who had access to it, and how the breach occurred. This assessment is crucial for understanding what legal obligations your company now faces.
The FTC emphasizes a thorough risk assessment. If personal information has been compromised—including Social Security numbers, driver’s license numbers, financial account details, or medical records—this triggers legal responsibilities, especially regarding consumer notification.
Ask yourself:
- Was personally identifiable information (PII) accessed or stolen?
- Is there a risk of identity theft or financial fraud?
- Were any encryption methods used—and were they compromised?
Step Three: Notify the Right People
Federal Guidelines from the FTC
Under federal law, there is no single data breach notification statute. However, industries regulated by agencies such as the FTC, SEC, or HHS (HIPAA-covered entities) must follow those agencies’ rules. Regardless, the FTC’s guidance is clear: notify consumers, law enforcement, and potentially the media when sensitive information is exposed.
You must also consider contractual obligations. For instance, if the data belongs to clients or partners, they may have the right to immediate notification based on service agreements.
Colorado-Specific Notification Laws
If your business operates in Colorado—or holds personal data on Colorado residents—your notification timeline is clearly defined by law.
Legal Requirements Under Colorado Law
- Prompt Investigation: A good faith investigation must be conducted to determine whether PII was misused or is likely to be misused. If so, the business must notify those affected.
- 30-Day Rule: You have up to 30 days from determining that a breach occurred to notify affected individuals. Delays beyond that can only occur to meet law enforcement needs or to restore system integrity (C.R.S. 6-1-716).
- Colorado Attorney General Notification: If 500 or more Colorado residents are affected, you must also notify the Colorado Attorney General within that 30-day window (C.R.S. 24-73-103).
- Content of Notification: You must inform consumers of:
- The date or estimated date of the breach
- The types of personal data involved
- Contact information for your business
- Guidance on how to contact the FTC and credit reporting agencies
- Instructions for setting up fraud alerts and security freezes
Covered Entities and Third Parties
Colorado law applies to any entity that owns, licenses, or maintains computerized data containing personal information about Colorado residents. While third-party vendors are not considered “covered entities” under the statute, you must ensure that they implement and maintain reasonable data security measures—or you must retain primary control over the data through your own safeguards (C.R.S. 6-1-713.5).
Step Four: Comply with Security Standards
Even if your breach response satisfies all notice requirements, you may still face regulatory consequences if your security measures were lacking. Colorado law mandates that businesses must implement and maintain reasonable security procedures and practices. These should be appropriate to the nature of the PII and scaled to the size and operations of your business.
This includes:
- Employee training on data handling
- Role-based access controls
- Use of strong passwords and two-factor authentication
- Encryption of sensitive files
- Regular risk assessments and software updates
If your data is encrypted, you may be exempt from notice requirements—unless the encryption keys were also compromised.
Step Five: Support and Reassure Customers
Restoring trust after a data breach isn’t just about compliance—it’s about communication. Make it easy for affected individuals to understand what happened and what they should do next.
Consider offering free credit monitoring, especially if financial information was exposed. Set up a dedicated phone line or help center. Prepare your customer service team with a clear script.
Messaging Tips:
- Be transparent, but avoid admitting liability before consulting legal counsel
- Show empathy and offer solutions, not excuses
- Use plain language, not legal or technical jargon
Step Six: Learn and Prepare for the Future
Once the dust settles, conduct a post-mortem analysis. Where did your systems fail? Was it human error, outdated software, or an unsecured third-party vendor?
Then, update your data security plan and breach response protocol. Regularly review vendor contracts and service-level agreements. Consider cyber liability insurance if you don’t already have it.
Key Takeaways for Colorado Businesses
If you’re doing business in Colorado, data breach response is not optional—it’s a tightly regulated obligation. You must:
- Investigate the breach in good faith
- Notify affected residents within 30 days
- Notify the Colorado Attorney General if 500 or more residents are impacted
- Include all required elements in the notification
- Ensure third-party vendors maintain adequate security
- Follow legal guidance even if encrypted data was compromised
Failure to comply could lead to lawsuits, fines, and enforcement actions by the Colorado Attorney General’s Office. More importantly, it can destroy your brand’s credibility.
Final Thoughts
So, what should a business do if there is a data breach?
Start with a clear plan. Respond quickly, notify properly, and always comply with applicable federal and state laws—including the specific regulations governing your jurisdiction. The FTC provides a comprehensive guide to help you build a data breach response plan, and Colorado’s legal requirements spell out exactly what to do if your breach affects its residents.
If you don’t have a breach response plan in place, now is the time to build one. If you already have one, review it, update it, and stress-test it. Because when it happens—not if—you’ll want to be ready.
Need help preparing your business for a data breach?
Download our free Crisis Readiness Scorecard or schedule a consultation with Ethia Strategies. We combine legal insight and PR expertise to help you protect your brand when it matters most.
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