Revenue and Reputation: The Costs of a Cybersecurity Breach
April 29th, 2019 by Function4
With all of the responsibilities that come with small business ownership, it’s easy to neglect cybersecurity. However, the cost of a data breach is simply too high to ignore. A single data breach could destroy your company’s revenue and reputation —or even put you out of business.
While every type of business is at risk for cybercrime, small businesses are especially vulnerable. Many smaller organizations don’t have the funds to dedicate to a robust cybersecurity program. Others lack the technical know-how to put an effective security plan in place. And still others mistakenly believe that a cyberattack just can’t happen to them.
If you think your company is too small to be at risk, think again. Large corporations aren’t the only targets for cybercrimes. In fact, when it comes to choosing a business to target, hackers don’t seem to discriminate based on size. Some may even prefer smaller targets. Case in point: One study found that 43 percent of all cyberattacks target small businesses.
Impacts of a Cybersecurity Breach
A cybersecurity breach could damage your company in many ways, from depleting revenue to destroying your professional reputation. The effects of a breach ripple far and wide, and they can last for months or years after the initial attack.
Here are some of the consequences of just one data breach:
- Damage to reputation. A data breach could leave your company’s reputation in pieces long after you’ve cleaned up your networks. Customers may not trust you to keep their information secure. They might abandon your business for a competitor that seems more reputable. Hiring a skilled PR agent may bandage your damaged reputation, but it’s hard to return to the base of customer trust you had before the breach.
- Theft of sensitive information. Cybercriminals will steal anything they can get their hands on, including customer records, credit card information, employee records, and business communications. But those aren’t the only areas of concern. Hackers can also gain access to intellectual property and trade secrets. Conniving criminals might even sell your top-secret company information to competitors or release it online.
- Loss of customer trust. Businesses don’t get very far without customer trust. That’s why businesses devote years of marketing and customer service to build trust. A loyal customer is a valuable business asset. Loss of trust can lead to customers taking their business elsewhere. You owe it to your customers to protect their information. By guarding their privacy, you encourage their trust. In the long run, protecting customers helps your bottom line.
- Financial losses. When networks are down due to a security breach, business activity and revenue grind to a halt. Even if a business has the resources to rebuild or recover from a cyberattack, the effort comes at a high price. The Hartford Steam Boiler Inspection and Insurance Co. (HSB), part of Munich Re, issued survey results that found 72 percent of hacked businesses spent more than $5,000 on cybercrime recovery. That’s a significant amount, especially for small companies operating on a tight budget. It’s no wonder that 60 percent of small businesses go under within six months of a cyberattack.
- Fines and penalties. In Europe, the General Data Protection Regulation (GDPR) seeks to fundamentally reshape the way data is handled. It fines companies for security violations. Fines can be up to four percent of their annual revenue or €20 million (that’s around $22 million in U.S. dollars). Some U.S. politicians are following Europe’s lead and proposing similarly tough penalties. That’s because U.S. legislators are recognizing the economic and security threats associated with a data breach. In an effort to protect consumers, the government may fine a business or impose other penalties in the event of a data breach.
An Ounce of Prevention
Prevention is the best strategy to stop cyberattacks before they happen. There are plenty of affordable programs out there to help detect and prevent threats like malware, phishing scams, or unauthorized access. Even basic, common-sense strategies like limiting access to your company’s server room or password-protecting company laptops and cell phones can greatly reduce your risk of a cyberattack.
You may be operating on a limited budget. You may even feel like you’re not tech-savvy enough to implement a cybersecurity plan. But even small steps help. Start by conducting a security assessment to identify weak spots in your company’s cybersecurity efforts. Then put a company-wide cybersecurity plan in place. Make sure to train all employees on cybersecurity protocols.
After all, your company’s cybersecurity is only as strong as its weakest link.
Need expert advice on how to protect your company? Function4 is here to help by conducting a security assessment on your company, providing security awareness training to your employees, fortifying your security across all channels, and providing backup hosting.
Posted in: Cybersecurity