Considering the realities of what a data breach could cost, businesses of all sizes and types need to implement a cybersecurity plan. Try to figure out how much attention and money spent on cybersecurity makes sense for your company. A data breach can lead to such significant loss that your business could lose credibility or even go under. The detrimental impacts should be a push to understanding cyber attacks and how to prevent them.
Analyzing the Cost
Research has found that the average annual total cost of a data breach for companies can reach up to a few million, and US companies tend to have the highest average cost of all countries, reaching over 8 million dollars. Areas of monetary losses involved in a data breach:
Detection and escalation
Costs of detecting and reporting a cybersecurity incident (auditing and investigation).
Notifying those involved with the incident (time spent making calls or writing emails).
How you respond to the breach, such as getting legal advice or giving gifts and discounts to customers.
Breaches ultimately lead to some sort of business interruption which will likely cause loss of revenue.
Even if the financial challenges are managed, there are still other associated issues. Cyber attacks will likely deter customers, both potential and existing, who will be concerned that their personal information is at stake. Damaging your business’s reputation can make it impossible to recover. A plan to rebuild the reputation will be needed to keep new and existing customers coming. Clients will want to be assured that the incident was taken seriously and their information will no longer be in jeopardy.
If clients and stakeholders lose your trust due to a data breach, the damaged relationships can cause lasting effects as those who are imperative to the business’ success may want to part ways. Leaked personal information will certainly cause doubt and anxiety. An awareness of a data leak is also likely to put off any future potential recruits. While investors could lose faith in the company altogether simply because a breach was able to take place, as it shows that a business was not prepared.
Understanding Overall Cost
Considering financial, credibility, and relationship damage from a data breach, it’s clear that the cost can be severe. With less protection against cybercrime, it can truly be financially devastating and lead to bankruptcy. For this reason, cybercriminals target smaller businesses, as they may be more vulnerable. The true cost of a data breach is based on the type and severity of the attack. Commonly it is the damaged reputation that is more detrimental than the initial monetary costs. The best data breach defense is implementing proactive protective measures against cybercrime such as security software, data encryption, staff online safety education, and cybersecurity insurance.
About IPRO Agency Insurance Services
IPRO Agency Insurance Services is a specialty insurance brokerage with the expertise to protect your firm, assets and to help you retain clients. Our services offer all types of professionals the protection they need so they can stay committed to their work with ease. We are connected with leading insurers to bring you the best coverage for your unique needs and areas of risk. Get in touch with us at 888- 673-8039 so we can begin to safeguard your success.