The continuous advancements in technology make it easier for businesses to engage with customers. Companies often utilize cyber security measures to protect sensitive professional and personal data. However, hackers are always learning new ways to infiltrate organizations.
According to Statista, businesses reported 1,001 data breaches in 2020. These cases compromised the personal information of more than 155.8 million people within that time. The consequences of a data breach can be far-reaching, and many organizations do not prepare for them correctly.
Managed IT services in McKinney from Network Elites can reduce data breach risks through data security protections. However, the more businesses understand the consequences they can face without protecting their sensitive data, the better they can mitigate the risk of an attack.
Top 7 Serious Consequences Of Data Breach For Businesses
Here are 7 common consequences of a data breach that a business can suffer from:
Damages to the company’s brand
When a company has a data breach, its reputation will likely decline. After consumers learn someone hacked a business, they may choose to stop doing business with them due to the fear of their personal information becoming exploited. It does not matter when a cyber-attack occurs because information on the internet is almost impossible to eliminate.
Dissatisfied and distrustful customers will vent online about the company’s hack and its inability to protect its customers. The negative attention can be detrimental to a small- or medium-sized business that relies on word-of-mouth referrals and repeat business from previous customers.
Consumers are aware of the value of their information. Cyber attacks can occur to any business at any time. However, most people will view businesses as irresponsible in their attempts to protect client information if they have a data breach.
Most businesses do not understand the high cost of a data breach until they experience compromised cyber security. The loss of finances can come from various avenues, including compensating affected customers, paying legal fees and penalties for regulatory non-compliance, investigating the cyber attack, and paying for stronger data protection.
The loss of future sales is another financial issue that companies experience after a cyber attack. When consumers learn about breaches, they often view the affected company as unreliable or untrustworthy. As a result of negative press and a decline in brand reputation, customers often choose to do business with competitors.
According to Ponemon Institute and IBM, the financial costs of a data breach average $4.34 million. About 38% of that total comes from the loss of sales.
Companies may expect to lose money from future sales if a cyber attack occurs. However, a data breach’s expenses usually come from multiple places, all of which will affect the company budget.
For instance, the business’s share price can drop after a data break, reducing the company’s overall value. Operational downtime will also create unexpected expenses. The longer the breach or ransomware attack remains unresolved, the more money the company will lose due to the inability to perform daily tasks as usual.
Most companies have to pay for a marketing campaign to improve their brand reputation and regain the public’s trust.
Even if a company is the victim of a malicious data breach, it can still face litigation. Businesses have a legal responsibility to inform consumers about data breaches that compromise their personal information. They are also responsible for dealing with the consequences of violating compliance regulations for global data privacy.
Suppose a consumer or organization chooses to sue the business for failing to meet compliance regulations to protect sensitive data. In that case, the business’s legal team will spend hours investigating the breach and looking for ways to protect its client. Not only will the company need to pay its legal team for its work, but if it loses the lawsuit, it will need to pay additional legal expenses.
Cybercriminals usually target small- and medium-sized businesses, not major corporations. A data breach can bring daily operations to a standstill.
The company will need to investigate the breach, determine how it occurred, and discover which systems the breach affected. In some cases, all operations will cease until investigators and the tech team resolve the issue. Depending on the extent of the breach, operational downtime can last for weeks, resulting in a dramatic decrease in revenue, which may be unrecoverable.
Sensitive data loss
Personal information is a precious commodity. It includes any data that could identify a person, including photos, a credit card number, email address, physical address, names, and biometric and genetic data. The consequences of a data breach can be devastating if a company loses sensitive data.
Companies must protect this information. If data loss occurs, the affected parties can experience life-altering consequences through no fault of their own. For instance, deleted or misplaced medical records put patients at risk when it’s time to receive medical treatment.
Trouble attracting new talent after a data breach
It is not uncommon for members of upper management to lose their positions because of the business’s inability to protect its sensitive information. Lower-level employees may also quit or lose their jobs as their company’s culture and morale take a hit. The turnover may be high, but that does not mean the business will fill the empty positions.
Any prospective employee will have to deal with the fallout from the data breach and its recovery efforts. Tech and security professionals are responsible for protecting the organization’s network. If your company needs to fill IT positions, you could encounter issues because these professionals can afford to turn down jobs without adequate security systems.
IT and network security experts are in high demand, thanks to their much-needed skills. If your company has a reputation for having a data breach, new talent may not view your company as a reliable or organized place for employment.
Protect Your Business’s Sensitive Information With Network Elites
Now that you understand the consequences of a data breach, turn to Network Elites. As managed IT experts, we offer customizable tech solutions for businesses of any size. Contact our team today to get started or learn what you need to know about password security.