Data breaches keep dominating headlines worldwide day after day. Although organizations are placing a greater emphasis on their data security, cybercriminals are constantly coming up with new ways to bypass defences and access essential corporate data. According to the 2021 Thales Data Threat Report, nearly 45% of American companies experienced a data breach in the past year. Cybersecurity experts advise companies to bolster their cyber defences because data breaches bring many damaging consequences. Here are some common ways your organization will be affected after experiencing a data breach.
- Reputational damage
It is no secret that reputational damage due to data breaches can be devastating for companies. Studies show that about one-third of clients in the finance, healthcare, and retail sectors will stop doing business with organizations that have suffered breaches. In addition, about 85% of them will inform others about their terrible experience, and 35.5% will express their dissatisfaction on social media. Bad news travels fast, and your company can dominate nationwide or global headlines a few hours after being breached. The loss of consumer trust and negative press can significantly damage your company’s reputation. Unfortunately, reputational damage lasts quite long and may affect your company’s ability to attract new employees, customers, and investors long after the incident.
- Legal liability
Enterprises are legally bound to demonstrate that they have put the right measures in place to secure sensitive data under data protection regulations. As such, your company can face legal action if this data becomes compromised, whether intentionally or unintentionally. Indeed, there has been a notable increase in class action lawsuits in America, as many victims of data breaches seek compensation for their privacy violations. For instance, Equifax’s infamous data breach affected over 145 million individuals globally, and the credit reporting agency has paid out over $700 million in compensation to affected American customers. Similarly, if you are a covered entity under HIPAA rules, you can be fined and even jailed if your company loses data to theft or hacking. That’s why it is vital to know the 2022 HIPAA compliance checklist to understand what constitutes a violation to avoid that action.
- Operational downtime and loss of productivity
Your company will need to contain any data breach and launch a thorough investigation to discover how it happened and what systems were compromised. Therefore, your operations will grind to a halt until all the important questions are answered. This post-breach investigation can take several days or even weeks, depending on the attack’s severity. You will undoubtedly lose a lot of money during this downtime, affecting your company’s bottom line.
Productivity levels can also plummet after your company suffers particular kinds of data breaches. For example, a ransomware attack will encrypt all your files until you pay a hefty ransom for the decryption key. Likewise, a Denial of Service attack will bring work to a standstill until the hacker’s demands are met, or your security team refutes the attack. Your workers cannot do much while they await the ransom’s payment and the end of the attack, leading to lost productivity.
