Here are some of the key areas where businesses might experience significant costs due to cybersecurity breaches:
A cyber attack can do long-term damage to your company’s reputation. After a data breach, customers may lose trust in a business' ability to protect their data, leading to customer churn. This is especially true in industries handling sensitive customer data such as finance, healthcare, and retail. Once that trust is lost, customers may share their experience with others and/or on social media, causing a ripple effect.
Additionally, negative media coverage and public perception can damage a brand’s image and value. This can cause share prices to drop as investors lose confidence in the business’ security posture and overall management.
A data breach can be a huge disruption to the day-to-day operations of your business. Cyber incidents can lead to significant downtime, disrupting business operations and causing delays in service delivery.
During and immediately after an attack, employees may be unable to perform their duties, especially if systems are taken offline or data is lost. The average time to identify and contain a breach is 277 days.
If the breach occurred due to insufficient cyber protection or improper protocols, your business may be subject to fines and penalties. Non-compliance with data protection regulations such as MARS-E or HIPAA can result in hefty fines.
The data breach could also result in a class-action lawsuit. Costs associated with legal advice, litigation, and settlements can be substantial. In the aftermath of a data breach, businesses may face increased scrutiny from regulators, leading to more frequent audits and compliance checks.
The aftermath of a cyber attack can put your business at a competitive disadvantage. During a data breach, your company could lose trade secrets, proprietary information, and intellectual property.
A cyber attack can also cause research and development setbacks. If research and development data is stolen, it can delay product launches and innovation efforts. Manufacturing and construction businesses are most susceptible to intellectual property loss. Often small businesses are targeted because they are easier to hack.
A cyber attack not only makes your customers wary, it can also affect your relationship with your insurance agency. Cybersecurity incidents can lead to increased insurance premiums as insurers reassess the risk profile of the business. In addition, insurers may impose stricter terms and conditions or even limit coverage after a significant breach.
Businesses that are victims of a data breach can find it hard to keep and attract clients. Existing clients may terminate contracts, and potential clients may hesitate to engage with a business that has suffered a breach, especially if customer payment information was compromised. About a third of businesses subject to cyberattacks lose revenue. Of those businesses, 38% lost 20% or more. Businesses may also need to compensate customers for losses incurred due to the breach.
The first step to mitigating a cyber attack is conducting an investigation. Forensic investigations to understand the breach and prevent future incidents can be expensive.
As a result of the attack, your business may have to rebuild or replace affected systems, software, and hardware. To prevent future attacks, investments in enhanced security measures and employee training should be made.
A cyber attack can have a major impact on your long-term business plan. Cyber incidents can force businesses to redirect resources from strategic initiatives to crisis management and recovery efforts. Expansion plans and new projects may be put on hold as the focus shifts to addressing the breach.
Loss of trust following a cyber incident can also occur within a company. Cyber incidents can lead to decreased employee morale and trust in the company’s leadership and systems. This loss of trust can make it difficult to attract and retain top talent if the company is perceived as being unable to protect sensitive information.
A cybersecurity incident can also affect your company’s third-party relationships. Breaches can strain relationships with vendors and partners, who may also be affected or may demand better security measures. Cyber incidents affecting suppliers can disrupt the supply chain and impact other businesses as well.
As businesses rely more and more on technology, cybersecurity is more important than ever. Over 90% of successful data breaches occur in less than 60 seconds, but it often takes businesses weeks or months to realize the damage that’s been done. The financial impact of a data breach can be astronomical - in 2023 the average cost of a breach was $4.45 million.
With over 35 years of experience, JANUS Associates is well-equipped to assist you in achieving your security, privacy, and compliance objectives.
Contact us today to discover how we can help safeguard your organization from data breaches and ensure a secure digital environment for everyone involved.