Cyber attacks appear in the headlines often and they oftentimes include data breaches that led to loss or theft of customers’ sensitive information. As business leaders and trademark professionals, the disclosure of a data breach has far-reaching effects in terms of financial repercussions and customer loyalty.
Data breaches also involve hidden costs such as heavy fines and penalties to compliance authorities like GDPR, forensic investigations into data breaches, compensation to customers and employees if their data has been compromised, and dealing with unexpected downtime.
Data breaches can also cause significant damage to the reputation of a company and result in a loss of consumer confidence. It is crucial for companies to adhere to security compliance standards and ensure that they are protecting their customers’ and employees’ data.
Be it a small scale startup or a massive multinational firm, a data breach can cause substantial damage to your company. It can lead to unwanted media and customers losing their trust in your company.
Furthermore, data breaches also impact market valuation, diminish the chances of mergers and acquisitions, and cause revenue loss.
The average time taken to identify a security data breach is 206 days, according to the 2019 Cost of a Data Breach Report by IBM.
The faster you contain a data breach, the lower the cost.
Nevertheless, you should avoid notifying your customers that a breach has occurred until you are sure that one has occurred.
In the age of social media where people are highly connected and influenced, the rumor of a data breach that involves them can have ripple effects in terms of negative marketing and press. The saying, “There’s no such thing as bad publicity,” doesn’t apply when it comes to data breaches and cyberattacks.
If customer data is compromised during a data breach, it will have drastic consequences.
Companies must audit their existing security standards and policies, and assess their information risks to ensure they have a robust security model in place. As a proactive approach, companies should implement an efficient response plan that can be quickly deployed in case of a data breach occurs.
To give you more information about the long-term effects of a data breach on businesses, here’s a list of the most severe effects that can impact your company.