Securing Data to Protect Against a Breach

Data breaches are a part of life, or so many believe. Cyberattacks are on the rise, making it challenging to keep up with the new technique’s cybercriminals use to gain unauthorized access to data. Sadly, many companies suffer a breach and don’t learn about it until a customer complaint or a third party alerts them to the incident.

When the attacker alerts the company to the breach, the cost of recovery increases drastically. Companies that find the breaches pay less to restore the data and handle other actions related to the attack. Every business owner must know the consequences of a data breach and take measures to prevent attacks before they occur. For example, they may look into securing access control systems and taking other measures to prevent an attack.

Financial Losses

Financial losses are the primary concern associated with data breaches. In 2023, IBM reported that the average company spent $4.45 million to recover following a breach. Legal fees, forensic investigations, and penetration testing were three key expenses associated with these breaches. The larger the breach, the greater the financial hit. Sadly, these costs don’t consider the other repercussions that may lead to additional economic losses.

Reputation Damage

A data breach can have a significant impact on a company’s reputation, and a loss of reputation can result in substantial financial losses. Many businesses find they never regain the trust of customers once an attack has occurred. People love to share negative stories about companies, so word gets out quickly following a breach. The company will invest a substantial amount of money in efforts to restore its reputation and rebuild trust with its customers.

Fines and Penalties

Every company that falls victim to a data breach is required to report it to the proper authorities. The company may then be penalized or fined for the breach. It may face legal challenges that can drag on for years, resulting in significant financial costs to the business. Furthermore, it may be necessary to implement new security measures or undergo regular audits.

Loss of Intellectual Property

Intellectual property may be stolen, which can be costly for the business. It can take years for the company to recover. Competitors may benefit from the property, harming the company even more. It could also harm the company’s market position.

Disruptions to Normal Operations

When a data breach occurs, it may take days or weeks for the business to recover and resume full operational status. Critical systems must be shut down to halt the attack, resulting in significant financial losses. Resources must be diverted from everyday activities and used to respond to the incident. Diverting the resources interferes with key business operations.

Insurance Premium Increase

A business owner may find that their insurance premiums increase following the incident. Cyber insurance policies are typically impacted, as the company is considered a higher risk. Some business owners find that no insurance companies want to underwrite a policy for them. If they find a policy, it can be costly.

Other consequences may come with the data breach. Customers might choose to work with another business following the breach, as they no longer trust the affected company. The long-term financial impact can also be severe, potentially leading to the business closing its doors for good. When all of these factors are combined, any business might struggle to recover, so prevention remains the best option. Preventing an attack is always easier than recovering from one.