The steep spike in cyber crime in the wake of the pandemic has cost businesses a lot in terms of both reputation and financial losses. IBM’s Data breach report 2019 report showed that 507 organizations across 16 geographies and 17 industries have sustained an average cost of USD 3.92 million with breach sizes averaging 25,575 records. More sobering are the studies that have shown 29% of businesses experiencing a data breach also loss revenue and nearly 38% of them with losses of more than 20% of their net revenue end up shutting doors.
The types of losses incurred vary with the nature of the breach. But typically, businesses have to contend with breach containment and fallout management costs, compensations to affected customers, decreased share value, punitive fines and other measures (if applicable) and heightened security costs going forward. With erosion in consumer trust and confidence, many may not choose to do business with an organization that has suffered a data breach. A recent PwC report found that 85% of consumers wouldn’t buy from a business if they have security concerns. Thoroughly understanding the consequences of a data breach is critical to protecting your business in the long term. IT Support Houston can help you prepare an actionable defensive plan to protect your highly valuable assets and sensitive data.
Data Security Breach: Top 6 Consequences for Your Business
- Impact on Brand Reputation – 93% of successful data breaches take place in less than one minute. At the same time, 80% of businesses take weeks (on average) to detect a breach. With social media, it’s hard to keep news of breach contained and the bigger the footprint of your company – the more attention the news is likely to get. Damage from a data breach can severely demoralize customer sentiment, especially if the breach was preventable or results in customer data being stolen. This creates a spiral of bad press and publicity resulting in flagging shareholder enthusiasm, especially if the financial fallout from the breach turns out to be significant. Houston IT Services can be a great resource to start getting the relevant help for your business to prevent data breaches.
- Loss of Intellectual Property – Loss of revenue and reputation are a given in the case of data breaches. But hackers can also target your business to steal your valuable intellectual property, such as, designs, strategies, and blueprints. While many SMBs continue to believe they are too small to form a lucrative target, recent data suggests that 60% of hacks target small businesses simply because they do not have adequate security posture and thus become an easy target for hackers. Losing proprietary information can be highly damaging for your business in the long term as you stand to lose ground to your competitors without it. Read more about Data loss prevention here.
- Forensic investigations – One of the many types of fallout of a data breach is the compulsory forensic investigation the business needs to perform on its own operation in the wake of an attack. This helps them determine and establish a causal link for the breach. These can throw up highly detailed evidence and insights into the modus operandi of the attack and the security vulnerabilities that were exploited. These insights can be tremendously helpful in preventing future data breaches. But these investigations can be costly and can further cripple the finances of the company already beleaguered by the financial stress of the attack.
- Impact on Finances and Revenue – Data breaches always prove to be costly, in one way or another. If the attack is targeted at wiping out your finances, it can be very hard to recover that money. Apart from that, you will need to immediately shell out money to hire consultants or experts to recover data or at least mitigate the impact of the attack. You also need to get your legal teams prepared in case of liability suits etc. Furthermore, you need to pay punitive damage to regulatory authorities and provide fair compensation to customers whose data has been affected. Small wonder then that many SMBs shut doors permanently in the wake of data breaches. If it’s not the various costs of the breach, businesses can also take a severe hit from the significant revenue loss that often accompanies data breaches. In case you manage to swim through all that, you might still need to invest months and years of time and energy into PR and marketing efforts to build up the trust and consumer confidence you lost due to the breach.
- Online Vandalism – Hackers differ in their intent to harm. Some may not be motivated by greed at all and others might hack your website due to ideological beliefs, just as a prank or, simply because they can. In such cases, they may choose to do subtle damage, such as, minor alterations to your website and even cover their tracks carefully so as not to get caught. These subtle alterations can be very hard or companies to notice in time, but can do a lot of damage to your company’s image and brand reputation. IT Consulting Houston can help your business get back on its feet after a breach and ensure it never happens again.
- Impact on Customer Trust and Turnover – We live in a digital age where the pandemic has made the world reliant on digital technologies for both their life and work. These makes customers ultra-cautious about how their data is being stored and managed, as they are well aware that a single breach can do irreparable harm to them as individuals. If a company has a track record of being lax with their customer’s data, customers can choose to simply take their business elsewhere, permanently. Moreover, with cyber-attacks dominating headlines everywhere, customers are scared and rightfully wary of being hacked due to company negligence about cyber security. With data breaches growing massively in scale and impact, it’s hard for consumers not to worry about their data. For instance, the Equifax breach is said to have impacted nearly 160 million people. That scale of impact is hard to comprehend and creates a ripple effect of distrust in business’ ability to store their customer’s data responsibly and prevent breaches from happening in the first place.
About Scott Young:
Scott Young, is the president of PennComp LLC, an IT Support Houston company. Being a CPA, Six Sigma Master Blackbelt, Change Management Certified and Myers Briggs Qualified, Scott’s expertise is reflected in PennComp as a leading IT company for computer services and network integration. PennComp utilizes Six Sigma methodologies and practices in their service delivery and offers state-of-the-art monitoring and management tools to their clients. His blog can be found at https://www.penncomp.com/blog/.