The annual cost of cybercrime is constantly rising with current predictions suggesting that the global cost of it could surpass $20 trillion by 2026. With that in mind, it’s vital for business owners and leaders to understand the consequences of a data breach and to conduct an audit of their own cybersecurity posture.
Cyberattacks can bring about a variety of negative results including but not limited to a loss in revenue, lost consumer trust and brand reputation, downtime, and even a drop in market cap and stock price. This is all in the case that the business is able to bounce back from the cyberattack at all.
Committing to a cybersecurity culture in your organization can help you fortify your defenses upfront, add you to the group of businesses prepared for a cyberattack, and give you the peace of mind that you’ll be resilient in the face of a cyber threat like a ransomware attack.
Recent history is showing us that without the proper cybersecurity protocols in place, the consequences of a data breach or cyberattack are highly detrimental.
To gain a better cybersecurity posture, you need to understand the differences between IT security and cybersecurity. Listen to this webinar with Impact’s experts to learn about the key similarities and differences between IT security and cybersecurity standards.
Data Breaches In the Short Run
There are immediate repercussions that cybercrime victims face like a loss of data, loss of revenue, and downtime. These issues add up quickly and can swiftly become highly expensive, especially for organizations that don’t have a mitigation plan in place already.
One of the major areas of concern for business owners and operators is the downtime that a successful cyberattack causes. Downtime is how long your vital systems are offline or inoperable. During periods of downtime, your organization won’t be able to handle basic everyday operations or handle consumer requests, meaning all revenue generating activity is essentially halted.
In fact, downtime is estimated to cost smaller organizations anywhere from $137-$427 per minute while larger organizations can see this figure climb all the way to $9,000 per minute.
The increased cost of downtime coupled with the rising frequency of cyberattacks makes modern cybersecurity practices a crucial aspect for any modern organization.
Looking at the Long-Term Consequences of a Data Breach
Lost revenue and downtime expenses are just a couple of the immediate consequences of a data breach that organizational leaders need to address following a cyberattack or data breach. Unfortunately, though, the hailstorm doesn’t stop there.
Beyond the immediate financial dip that businesses experience after a data breach are more long-term effects that hinder or halt organizations altogether. One of the largest influences a data breach can have on your organization is how it effects your reputation among consumers.
Reputation can take decades to earn and seconds to lose. Consumers are also putting a stronger emphasis on cybersecurity and data privacy in choosing which brands to patron. In fact, 25% of consumers won’t consider your brand an option following a significant data breach or downtime caused by a cyber incident.
One of the nice things about working with an IT managed services provider is that you don’t have to worry about downtime nearly as much as they’ll have the professionals in place to keep security top of mind.
This shows how neglecting cybersecurity practices in your organization effectively removes a full quarter of your target market during a time when you’ll need them most for recovery, in turn capping your ability to grow the organization and even hindering additional expansions into secondary markets.
The reputational damage suffered from a data breach doesn’t even necessarily end there. That’s because close to two-thirds of organizations raise their prices, which hits the consumer directly in the wallet and can push customers to choose an alternative brand.
“Additionally, these costs can pass on to customers and investors, limiting a company’s ability to maintain its market position. For example, 60% of organizations that have experienced data breaches have raised their prices.”
While passing the bill onto the consumer might mitigate some of the increased costs cyber victims face, it also further diminishes an already depleted target audience due to a loss of trust in your organization.
Auxiliary Costs Also Increase
Not only does a data breach wreak havoc on you financially in the short run and hurt brand reputation in the long run, but it also increases your overall cost of doing business. There are two main contributors to the increased cost of operations.
The first is an increase in the rates a company will have to pay for cyber insurance in the future. These rates are calculated on a variety of risk factors, just like other insurance policies, but are typically driven upward by incidents like a data breach.
The other major contributing expense to the increased cost of doing business comes from interest rates. Companies find it more difficult to attract partners and investors following a cyberattack or data breach. On top of that, lenders may charge higher interest rates on borrowed capital.
These increased costs put an even heavier financial strain on companies following a data breach making it vital to prioritize cybersecurity practices from the get-go.
A Final Word on the Consequences of a Data Breach
The consequences of a data breach span across the entire scope of your organization. Reaching from immediate financial impact to long term brand repercussions, a data breach or like cyberattack can pin your organization between a rock and a hard place.
To give yourself the best chance at avoiding a major data breach, prioritize IT security and cybersecurity practices in order to create a security-based culture.
Cybersecurity is becoming a necessity among modern businesses in a digital-first economy. Commit to keeping your systems secure with a comprehensive security strategy that spans both IT security and cybersecurity by watching Impact’s webinar.
