The Hidden Costs Behind Data Breaches
Data is one of the most valuable assets in today’s world. Today’s digital giants- such as Microsoft, Google, and Facebook- command incredible amounts of data. Despite their size, however, even they deal with security incidents. Breaches are a huge threat to any organization, with the average cost of a data breach being $3.86 million (Varonis).
A data breach is when an unauthorized party gains access to data. Data breaches often involve financial information (such as credit card or bank account details). They might also involve protected health information, PII (personally identifiable information), trade secrets, or intellectual property. Data breaches can also be known as data leaks, cloud leaks, information leakage, or a data spill.
While one may think of data breaches as a situation involving cybercriminals with sophisticated cyber-attacks, this is not always the case. Inappropriate disposal of computer equipment, human error, or poorly configured infrastructure can also be a common cause.
With data breaches, the focus is often on the cost of restoring services. However, there are many consequences that are just as important. A data breach can cause reputational harm (both internal and external), increased insurance premiums, downtime, loss of intellectual property, and more. Read on to learn more.
Reputational Harm
One of the most overlooked aspects related to a breach is reputation. When news breaks to clients or staff, it often impacts reputation. The harm occurs both externally- with clients- and internally, with employees and shareholders. Once trust is broken, it is incredibly hard to recover. It can take years- if trust is regained at all. You can lose clients, contracts, staff, and ultimately revenue as a result of the breach.
Did you know that private companies are required to report breaches that may involve PII (Personal Identifiable Information)? Regardless of the size of the breach (e.g. laptop stolen, mailbox compromised, or infrastructure breached), if your business cannot guarantee personal information was not exposed in the breach, you are required by law to report the incident to the Government of Canada and the information is made available to the public.
Increased Insurance Premiums
If you have cybersecurity insurance- which is highly recommended- premiums will likely increase after a data breach, especially if your company is found to be at fault. You may also be declined coverage upon renewal and in the future.
Check out our article here for more information about cybersecurity insurance.
Downtime
This is a big one. How much does it cost you per hour when your team can’t produce?
If you’re the victim of a significant breach (e.g. major ransomware attack) you may lose access to essential data needed to operate. Downtime can have serious consequences – especially financial. Every hour of downtime affects the bottom line. It’s important to restore access to data as quickly as possible.
Loss of intellectual property
This is often a considerable risk for start-ups that are in their early phases of developing a brand-new product or service. Patents, blueprints, or other intellectual property are often housed on servers or in Cloud environments. Imagine if the confidential information was exposed and stolen. A malicious actor could use the IP, post it on the internet or sell it to a competitor. This could be catastrophic to a start-up or generally any business trying to go to market.
Other consequences
There are a few other ways that a data breach can impact your company:
- You may have to pay out-of-pocket for an IT company to re-secure your systems.
- You could be sued, depending on the information that was leaked.
- You may be required to hire a forensics team to investigate the leak.
- You may have to pay the ransom in a ransomware incident.
From a worst-case scenario, if you lost your data entirely, could you recover? If the answer is no, it is vital that you take immediate steps to secure your data.
How to prevent a data breach
The best way to prevent a data breach is to work with an expert Managed Services Provider that can help you implement and continually enhance your cybersecurity posture. A reputable IT provider can help you secure your systems, prevent unauthorized access, and monitor your systems. The right IT provider will help reduce the risk of data breaches.