What Are the Consequences of a Data Breach?

Sometimes, a data breach may happen despite taking every measure to prevent one. As history has shown time and time again, a witty hacker can outsmart even a large enterprise with a dedicated cybersecurity team. Unsurprisingly, the consequences of a data breach can be absolutely devastating, and they may extend beyond the financial side of it. 

Here’s how a breach can affect your company: 

1. Loss of reputation

 Reputation takes years, sometimes even decades of hard work to build up, and it can literally be wiped away overnight. Although the company might not be the one at fault, the customers can experience the breach as a failure to protect their personal information and thus a betrayal of their trust. As a result, they are likely to flock to the competition, resulting in a loss of business for the said company. 

2. Financial damages 

The operational delays, regulatory fines, remediating the damage, and restoring the infrastructure to its prior state can cost upwards of millions of dollars. According to the Ponemon Institute, an average data breach will cost the company roughly $4.24m. Keep in mind that the longer it takes to notice that something’s amiss, the more it will cost.

3. Data theft 

Hackers may gloat at the thought of disrupting your business, but running away with your trade secrets could draw an even wider smile on their face. They may then go on to sell these confidential secrets on the dark web or even directly to your competitors. As if this weren’t enough, they could also steal the complete list of your customers along with their contact details, which is likely to lead to them getting published and attracting bouts of spam. Although it’s possible to file a request to deindex one’s personal data from Google, you’d still have to go at it from its root source to thoroughly eliminate the problem.

4. Regulatory fines

On top of other financial damages, breaching GDPR and other privacy-focused regulatory guidelines can lead to fines that can bring a company to its knees. Ever since May 2018 when the data protection law went into effect, companies can be fined for non-compliance, and the sum can easily reach millions of dollars. In concrete numbers, it’s up to $20m or 4% of the company’s annual revenue, whichever is greater, so there is little mercy in this regard. In 2020 alone, various European data agencies issued a grand total of $193m in fines.

5. Loss of interest from job seekers 

A human brain is wired to glimpse over the fence from time to time to see if the grass is greener on the other side. Would the world’s top talent want to work for a company that recently suffered a data breach or is possibly in the midst of recovering from it? Quite unlikely. Even their current workforce may start exploring alternative employment opportunities due to an increased amount of work-related stress.

To conclude 

The consequences of a data breach can be exhausting from a psychological as well as a financial standpoint. This highlights the importance of focusing on preventive rather than curative measures; a necessity if your company wants to stay on top of cybercrime.

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