Data Breach:
4 Damaging Consequences on Your Business
Digitalizing your business gives you a competitive advantage but also puts your valuable information at risk. In 2019, 43 percent of data breach victims were small and medium businesses. When an individual or an organization’s personal information is “breached,” it means their data is accessed, stolen, and used without the knowledge or authorization of the system’s owner.
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Data breach is a serious issue but often overlooked by organizations. In fact, 93 percent of successful data breaches occur in less than one minute, yet, 80 percent of businesses take weeks to realize a breach occurred.
If you are running a startup or planning to digitalize your business, it is important to know beforehand the possible repercussions of data breach. Here, are four damaging consequences of data security breach on your business:
1. Reputational damage
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News spread like wildfire, especially the bad ones. As much as it is devastating to face data breach, the reputational damage could create long-term complications. You’ll have to deal with lost confidence, bad publicity, and your personal information could be further be used to damage others’ reputation.
As a result of a breach 65 percent of victims are quick to turn their backs from an organization, according to a survey. Not only that, 85 percent will likely tell others about their negative experience. While 33.4 percent admits using social media to voice out their dismay, 20 percent comments directly on the company website.
2. Financial setbacks
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According to studies, 29 percent of businesses confronting data breach end up losing their revenue. Of those businesses, 38 percent experience a loss of 20 percent or more. A 2018 US report says the businesses lose a total U.S. is $7.91 million due to data breach.
Meanwhile, the sectors most significantly affected by data breach are healthcare and banking.
Depending on the nature of the breach, the affected business will have to struggle from the financial requirements of containing the breach, compensating customers whose data was compromised, and strengthening database security.
3. Operational disruption
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Worst case scenario: data breach may wipeout all your data. This may take some time recovering and the most common course of action is to halt your operations until a solution and the source of the breach are found. This often results to losing customers which leads to more revenue losses. Unfortunately, 60% of small and medium businesses close within six months of a data breach incident.
4. Legal implications
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When an individual’s personal information is compromised due to data breach, this often results in lawsuits. Companies such as Target, Home Depot, and Neiman Marcus paid tens of millions of dollars to settle affected customers. There are also cases where authorities restrict companies from operating until investigations are complete, which often leads to more financial loss.
To prevent data breach, cybersecurity should always be considered a top priority for businesses. Investing in cybersecurity now can mean big savings down the line.
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