Every day, businesses battle the very real possibility that personal and customer data may be breached. Data breaches have grown exponentially over the last few years as technology has advanced and many companies fall victim to hackers attempting to gain this valuable information. It is crucial for businesses to be on their toes with preventative measures as well as an incident recovery plan. Highly sophisticated hack attempts may make these breaches unavoidable but enlisting a reliable cyber security team to implement incident recovery plans are essential in mitigating the burdensome load that comes with breaches.
When a breach occurs, businesses lose more than just data. In addition to a sense of security and faith in IT systems they thought kept them safe, the consequences companies face following a breach are grave. Businesses are often forced to file for bankruptcy, lower employment rates, or abandon the company for collateral. This puts into stark focus that the cost of a breach is considerably more than the cost of employing good cybersecurity protection with a recovery plan. Below is an overview of how a company can go from breach to bankruptcy and how to protect yourself.
A diminished customer or client base is a huge loss that follows a breach. Simply put, fewer clients means less revenue. A recent study from HyTrust suggests that businesses may lose 51% of customers following a breach of data. While there is currently legislation requiring companies to inform consumers about a data breach, companies understand that lying will generally lead to a bad reputation if breaches are discovered which will contribute to even more lost business. If a business is loyal to its customers the easier it is for their customers to return that loyalty.
A breach could be big or small but it always involves a computer system being hacked. Computers and POS systems are expensive and if compromised by malware system, they may have to be replaced. In addition to the replacement of systems being costly, it is also disruptive to the operation of business and often prevent or, at the very least, slow down the achievement of goals employees and shareholders have set.
The financial ramifications of a data breach are obviously significant. Phishing schemes, lost or simple passwords, social engineering, or malware data compromised contribute to hacks and once the data is breached, the repercussions could reach into the millions. A breached business may have to pay out customers and banks affected by the breach. These payouts may include credit card companies and banks to cover damages suffered as a result of the breach, in addition, the cost of providing credit monitoring services. For example, if a bank can show all of its losses from a business breach, the business will be liable to pay up to 60% of the losses back to the bank. Credit card companies can also claim a $2.00 fee for each credit card that was comprised in the breach. The financial losses to small business could be catastrophic.
When looking at the cost associated with security breaches, it’s easy to recognize that being safeguarded from cyber attacks is extremely beneficial. There is no doubt that enlisting the support of a cybersecurity team is an investment but when evaluating the return on investment, comparing the potential cost of a breach to the cost of protection provides insight into the return on investment. Work with a team to determine the cost to secure data, develop an incident recovery plan, monitor systems in real time, and train your team on security best practices. These are skills and deliverables most in-house IT personnel are not equipped to perform and in the long term could mean the difference between reacting quickly to a threat and being forced to file for bankruptcy. A proactive approach to cybersecurity is a preventative measure which will keep your business running. It is an investment that could potentially save you, your company and your customers millions.