IMPLICATIONS AND CONSEQUENCES OF
A DATA BREACH ON A BUSINESS
IN THE EVENT OF A DATA BREACH ON YOUR BUSINESS
THE CONSEQUENCES AND IMPLICATIONS ON
YOUR BUSINESS IN THE EVENT OF A DATA BREACH
A DATA BREACH CAN COST YOU AND YOUR COMPANY IN BOTH THE SHORT AND LONG TERM
One example is the high-profile data breach of Sony's systems in 2014, which resulted in an estimated cost of $35 million. This figure includes both obvious sources of monetary loss such as establishing more secure systems, conducting investigations, paying fines, dealing with lawsuits, hiring contractors and forensics personnel to harden the infrastructure, as well as ``hidden costs,`` which are less obvious. These hidden costs include a decrease in business revenue due to a decline in purchases from customers, which is related to a decrease in positive sentiment towards the business from its customers. Both costs can significantly impact the bottom line of your business.
Depending on the industry, hidden costs may be more or less significant in regards to the overall monetary loss associated with a data breach. For instance, highly-regulated industries such as the healthcare industry may have significantly greater fines associated with a data breach. One example is the $1.7 million that managed-care company Well point had to pay for not providing proof of due diligence to keep their databases secure.
IN 2015, A SURVEY FOR TRUSTE DATA PRIVACY MANAGEMENT SOLUTIONS, CONDUCTED BY IPSOS, FOUND THAT CUSTOMER CONCERN FOR DATA SECURITY WAS AT AN ALL-TIME HIGH, AT 92 PERCENT
Due to the wide array of personal information that businesses routinely collect from customers, it is imperative - from a legal, moral and ethical standpoint - that businesses take every precaution necessary to safeguard the sensitive customer data that they have been entrusted with. Surveys also indicate that businesses were impacted due to this lack of customer trust - the impact had increased to 91 percent in recent years, with some customers even avoiding particular companies that they felt were untrustworthy.
In another study contracted by IBM and done by Ponemon Institute in 2013 it was determined that post business-disruption costs (e.g. a data breach) associated with reputation damage could result in a loss of $20,000 to $5,270,000 over a 24-month period following the disruption.
LEGAL ACTION CAN
FOLLOW A DATA BREACH
THERE ARE NUMEROUS LEGISLATIVE REQUIREMENTS AND PENALTIES FOR LOSING SENSITIVE INFORMATION
In the event of a data breach, the failure of a company to ensure complete data security often results in that company being required to pay fines, and they may be ordered to cease operations until security holes are fixed. For example, the Federal Sentencing Guidelines stipulates that company executives may be fined up to $290 million in the event that a data breach occurs when they cannot prove due diligence to ensure data security.
ALL IMPLICATIONS OF A DATA BREACH LEAD TO
BOTH DIRECT AND INDIRECT FINANCIAL LOSS
WE CAN PROTECT YOU FROM POTENTIAL FINANCIAL LOSS
With potentially substantial direct and indirect costs costs being incurred due to a data breach, firms should realize that the costs associated with maintaining data security are far lower than the possible repercussions of inadequate security.