A data breach only takes minutes. According to this CNBC report, about 93% of reported data breaches take less than a minute. And yet, the consequences of a data breach are extremely damaging, regardless of the size of the attack or the amount of data stolen. There is also the added challenge of discovering the attack. Most organizations take weeks, if not months before they even discover the occurrence of an attack.
This makes it more challenging to prevent and safeguard against cybersecurity threats. Also, it emphasizes the need to think one step ahead of these attackers, however difficult that may seem. This article will take you through the most damaging consequences of data breaches so you can step up your cybersecurity measures.
5 Damaging Data Breach Consequences
A data breach can have a severe and vast impact on your organization. As a result, the frequency of data breach attacks causes alarm to organizations that might be the next target for these attackers. By understanding the full extent of cybersecurity breaches, your organization will no longer be complacent and become more consistent in its efforts to manage the risk.
1. Financial Loss
Financial loss or loss of revenue is the most evident data breach consequence that can potentially damage the organization under attack. It is also the hardest-hitting consequence because organizations lose billions of dollars in the process. According to the IBM Cost of Data Breach Report for 2022, the average cost of a data breach in 2022 is 4.35 million USD. This number is up by 2.6% from the 2021 average cost of 4.24 million USD.
The cost involved with a data breach covers the compensation made by the organization to the affected individuals or customers. It could also cover setting up an incident response program and the investigation of the breach. Further costs will involve the implementation of new security tools and technologies, along with any lawsuit that the organization will face as a result of the attack. But perhaps the biggest cost will come from the fines and penalties that your organization will face for non-compliance with existing security laws and policies. Depending on the severity of the attack, you could pay millions in fines.
The upfront costs are only part of the equation. Your organization could incur more revenue loss for any other effects of the attack, such as when you have IT downtime or you switch your servers offline.
2. Damaged Reputation
Damage to your business reputation is one of the most significant consequences of a data breach. Businesses spend a great deal of time and resources building their brand and reputation. However, one incident of a data breach could be enough to undo all the work that you've done.
According to this research, customers will more likely choose another company to do business with after an organization has suffered a breach. Customers lose their trust in a company and some will even vent their frustrations or lack of trust to others. This means that the damaging effects of a data breach can have exponential effects and reach.
Once your reputation is damaged, it can be very difficult to fix it. Even if you manage to, you can't get it back to what it once was because this incident will be in the back of people's minds. Not only do you lose your existing customers, but it also destroys your ability to gain new customers and acquire new talent.
3. Lawsuits
Data protection regulations exist to ensure that all organizations employ the best practices to ensure the safety and privacy of customers' information. Therefore, a breach is an activity that demonstrates the negligence of an organization in protecting the confidentiality of its information. Individuals who are affected by the data breach have the legal right to pursue a lawsuit against your organization.
Both the US and the UK saw an increase in class action lawsuits involving data breaches over the past decade. The concerned organization must incur additional costs to hire a legal team to address these lawsuits and some are even required to pay compensation to the affected individuals.
4. Loss of Confidential Data or Intellectual Property
A data breach not only targets the theft of customers' personal information, it can also be used to steal intellectual property and other sensitive data owned by an organization. If your business involves patents and intellectual property, you must strengthen your cybersecurity measures to prevent a data breach.
If your business hinges on intellectual property, you could end up losing your business if this information is stolen.
5. Operational Downtime
Upon the discovery of a data breach, your company will be forced to temporarily shut down operations. This will give you time to investigate the attack and prevent the attackers from causing more damage to your system. For online or e-commerce businesses, you will be forced to shut down your servers, which means your website will be inaccessible to your customers for an undetermined period of time.
Shutting down your business operations can disrupt your business flow. This process could take weeks, or months, depending on the type and severity of the attack. The forced operational downtime can significantly impact your revenue potential. Some organizations are so drastically affected that they are unable to recover from this attack.
This Gartner report cites that the average cost of operational downtime is $5,600 per minute. Hence, your business could lose a lot of money the longer you have downtime of your operations.
Final Thoughts
Data breaches happen with more regularity today than ever before. Organizations must step up to the challenge and heighten their cybersecurity protocols to avoid damaging data breach consequences.
There is no room for complacency as attackers are using more sophisticated technology and their attacks are becoming more complex. The only way to ensure you can avoid any of the consequences listed above is to regularly assess your risk and improve your cybersecurity controls accordingly. Emphasis must be placed on regularly updating your security practices as cybersecurity attacks are always evolving.