According to NBC News, the financial damages caused by data breaches on businesses have increased by 6% since last year — costing companies an average of $4 million each. Nowadays, hackers become more sophisticated, and data breach incident numbers rise every day. It now becomes imperative for business owners to double their efforts to reduce exposure and to identify threats.
But what is a data breach? A data breach is the intentional or unintentional release of valuable information to malicious third parties, which can be done by disgruntled employees or cybercriminals.
If you’re thinking of protecting your valuable data, whether it’s the best VPN for Netflix in Australia or a professional IT security solution for your business, having the right defenses according to your needs will definitely reduce data breach risks.
Here are eight consequences of a data breach to your business.
- Reputation damages
Your business’ good reputation is one of your best assets, and you must constantly make efforts to maintain and nurture its integrity. However, when a data breach happens to a business, it can definitely damage even the most established reputation. Although hacking incidents have different negative effects on various organizations, companies that have been breached by hackers report that their reputation was affected adversely. According to statistics, around 50% of organizations who suffered from a data breach had damages on brand value and reputation.
- Decreased competitiveness
Cybercriminals had been targeting business’ proprietary information such as trade secrets, pricing strategies, and customer lists. Once hackers get their hands on these kinds of valuable information, the data can then be used or sold to negatively affect the competitiveness of a business. The effects of a data breach such as this could intensify with time if not discovered and controlled immediately.
- Loss of customer trust
Most, if not all, clients share sensitive information to businesses, thinking that their data are protected by security measures. If your business gets hit by a data breach, your customers will surely question their trust in your organization. While the breach itself will impose negative effects on your customer loyalty, if your business inefficiently handles a breach like that, you will also suffer from losses in your client’s confidence.
- Reduced revenue
If you’re aware that your business had its systems infiltrated by an untrusted third party, you’ve probably stopped all operations until the problem is solved. You’ll be obligated to find the cause of the breach by hiring IT security professionals, preferably with an Australis IT Courses qualification, especially when a flaw in your network was accessed and sensitive information was exploited. The processes on the downtime can significantly affect the business’ revenue. The longer your business systems are down, the heavier financial losses you’ll be suffering. It can also be in the form of losing customer trust or clients looking elsewhere for product purchases.
While cyber attacks on larger financial institutions may give hackers a sizeable prize, softer targets such as small businesses have less sophisticated and easy-to-penetrate defenses, making them prime targets for cybercriminals. Although credit card frauds can lead to financial losses, stolen data can be much more valuable to hackers, particularly when sold on the black market. According to reports, various login credentials can be sold up to $1,500.
Your business’ financial losses will not be the only monetary thing you’ll be thinking of when attacked by cybercriminals, as monetary penalties are present to companies that fail to comply with data protection regulations. Authorities are now considering stricter regulations — such as fines reaching up to $23 million, or 4% of annual revenue, whichever is higher — numbers that would significantly affect any business with insolvency.
- Intangible costs
After fighting the financial losses and fines of the breach incident response, there can still be several hidden long-term costs that your business will face. The negative impact of a network downtime often is surprisingly underestimated, especially if your company has little to no continuity strategy — an organization that’s already struggling to maintain a steady cash flow may have to face additional troubles from rising insurance premiums and increased costs to raise debt.
- Business closure
According to research, about 69% of businesses that have been hit by a significant data breach usually fail within the next two years after the incident.
Technology is fundamental to any business, but it should be protected from cyberattack threats. Let these consequences encourage you as a business owner to implement safeguards against cybercriminals and make your business compliant with data protection laws.