If you run a business that relies on technology, you should stay aware of data breach dangers. While the frequency of data breaches increases yearly, the 8% increase in the first quarter of 2023 constitutes the greatest uptick in two years.
Despite continual advancements in cybersecurity, attackers consistently find ways to breach defenses. Here are the top risks to consider when deciding how much to invest in cyber defense.
Financial Loss
The most obvious danger of data breaches is the resulting financial loss.
What's included in the cost of financial losses?
- Compensating affected consumers
- Establishing a response team and procedure
- Investigating the breach
- Reinforcing your security
- Legal fees and fines
- Damage to your valuation and share price
Damaged Reputation
While many companies can recover from financial loss relatively quickly, the reduction in consumer trust can take years to overcome. The research on this reputational damage shows that up to a third of customers in the financial, retail, and healthcare industries will stop using companies that have suffered a breach.
However, the damage can reach even further than existing customers. Because of the fast rate at which modern news travels, your brand can suffer worldwide negative press hours after a data breach.
Operational Downtime
Data breach dangers include a significant period of downtime as your company scrambles to handle the situation. IBM has identified the average time to find and repair the breach is 277 days. While you won't shut your business down completely during these nine months, you'll experience significantly reduced productivity as you dedicate a substantial portion of your business to the breach's aftermath.
The downtime can significantly increase how long you take to recover the financial loss and repair consumer trust.
Legal Penalties
When a business considers the legal implications of a data breach, the financial penalties are usually at the forefront of its mind. However, the penalties affect more than just your finances.
Data regulations require businesses to demonstrate they've done everything they can to protect consumer data. Individuals who believe the company could have improved their security can sue for damages. As the prevalence of data breaches increases, experts expect more individual and class action lawsuits to flood the courts.
Data Loss
Not every data breach involves sensitive personal data. However, when a hacker obtains a person's sensitive data, the negative impact can last the rest of their life. Sensitive data ranges from names and passwords to financial information, social security numbers, or health records.
When it comes to sensitive data, the long-term data breach dangers include:
- Identity theft, which can result in home foreclosure, loss of assets, or bankruptcy
- The inability to obtain proper or adequate medical care
- Loss of reputation or good standing for the affected individual
Considering all these long-term dangers, companies who invest a substantial amount in cybersecurity efforts will likely fare better and maintain a firm foundation than those who don't. Invest in the right tools to protect yourself.
