With cyber attacks increasing in frequency and severity, it’s important for business owners to understand how their organizations will be affected. Whenever security breaches hit the headlines, the focus is always on the impact on the victim, more specifically how their private information was leaked.
However, cyber attacks can have lasting implications on a company’s reputation and financial health, regardless of how well it was handled. In fact, the average cost of a data breach to a U.S. business is seven million dollars. Because all business owners should know what they’re up against, here’s just how a security breach could impact you financially.
Financial Costs of a Lawsuit
The most immediate financial blow is likely to come from a lawsuit. Customers who suffered a monetary loss or infringement on their personal information may decide to sue your company as a result of the breach. In any litigation scenario, the company on trial will have to pay for legal defense, and those costs will multiply if your business loses the case and has to pay damages. In any event, legal fees can range from $5,000 to well over six figures. Luckily, there steps you can take to reduce the impact on your business. Hiring a digital forensics Chicago expert to investigate the breach will not only improve your chances of data recovery, it will also provide you with evidence to use in court that may prove the breach wasn’t your fault.
Financial Loss from Damaged Reputation
Although it may not hit you right away, your company’s damaged reputation is likely to cost you the most in the long run. According to Security Metrics, many businesses have documented losing up to 40% of their revenue from customers after a breach. Whichever way you look at it, customers losing faith in your brand will cost you financially, and it may take years to rebuild their trust. However, with cybercrime on the rise, sadly data breaches have become something we’re more accustomed than ever to accept and move on from.
Disruption to Your Business
Whatever you do, a data breach will severely disrupt your business in the short term. How much you stand to lose in financial terms depends on your mode of business, the number of employees in your organization, and whether the breach takes place during your busy season. According to a recent study, business disruption accounts for 39% of all financial loss after a security breach, which involves costs from business process failure and lost productivity. Even if you’re able to work remotely, your devices and computers will probably be seized for forensic investigation, and your office treated as a crime scene.
Cost of Leaked Client Records
According to the Ponemon Institute study that examined the costs incurred by 64 U.S. companies across 2015, the average cost for each lost or stolen client record is between $217 and $221. However many clients you have records of, and however sensitive their data, a security breach is bound you impact your company significantly.