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7 Ways Data Breaches Can Cost You Money

Not losing money is as important as earning it. And of the many challenges businesses face every day, cyber threats present a tremendous risk. Indeed, the global average cost of a data breach has increased to $3.86 million. The resulting damages vary from bad reputation to disrupted operations — all of which can potentially lead to insolvency. Here are seven consequences you may have to deal with in the event of data loss.

1. Systems Gone Down

Malware attacks and internal errors can seriously affect the safety of a company’s sensitive data and systems. When that happens, hardware and software may stop working for hours or even days. For example, hackers could freeze access to computers asking for a ransom in exchange for the access key to those assets. Alternatively, internal bugs and faulty processes may force you to deactivate your equipment.

2. Disrupted Work Routine

Daily workflows are interrupted while computers are down. Hence routine tasks are hindered and employees get overwhelmed with more things to do, like interacting with customers and other stakeholders via phone or in person. Extra work adds pressure and stress which in turn reduces productivity and leads to higher expenses.

3. Public Relation Efforts

Keeping the public in the dark after a breach is a bad idea. On the contrary, companies must be open about what happened, answer questions, show control over the situation, and take steps to reestablish the firm’s image. Of course, managing the media and hiring PR specialists to help you bring additional costs.

4. Client Litigation

Some clients might require compensation and choose to sue the companies that mishandled their private information. Lawsuits are demanding procedures — requiring preparation, time to go to hearings, among other things — not to mention how expensive lawyers are and that indemnifications may need to be paid.

5. Damaged Customer and Supplier Relationships

No matter how proactive the firm is in resolving the situation, some customers will still leave you, causing a drop in sales. Lower revenues can quickly escalate into employee layoffs and further negative press. What’s more, some suppliers may prefer not to do business with you anymore to safeguard their own reputation. Or they could take advantage of the situation to renegotitate contracts and raise their prices, making your company less competitive overall.

6. Investments in Cybersecurity

Preventing future data breaches should be a priority. Mistakes can be avoided by educating employees about security best practices such as the use of strong passwords and how to detect phishing attacks and instances of accidental emailing. Moreover, security experts must be hired to assess systems and implement solutions that will enable better data protection.

7. Fines for Not Reporting Breaches

In light of the above consequences, it might be tempting not to report data breaches. But governments around the world have made it a legal requirement to notify all cases in which customers’ private details might be compromised — otherwise imposing severe fines for noncompliance.

Data breaches inevitably cost money, making better cybersecurity a necessity for the continuity of companies no matter their size or industry.

Author bio

Alexandre François is a content professional and head of marketing at SafeSend Software. He is well versed in email security and enjoys sharing best practices that both individuals and businesses can follow to reduce the risk of cyber threats and tackle data breaches.