What The Ashley Madison Hack Tells Us About M&A Security Risk

The online service Ashley Madison is reeling from a catastrophic data breach that resulted in the public exposure of its customers' sensitive private information.  Ironically, the Ashley Madison hack was a very conspicuous and public affair. However, not all cyber security breaches are publicly broadcasted. Most hacks are done surreptitiously such that the hacked company would not know (at least not right away) that it has been attacked. Such "private" hacks can go undetected for months or even years after the initial cyber security breach, and the consequences and damages resulting from the breach are therefore very difficult to predict, both in terms of scope (e.g., the company might not know how much of its information has been compromised or what reputational effect this will have) and the quantum, in dollars, of total liability.