5 Damaging Effects of a Data Breach That Can Sink Your Company

06/14/2022 | by Jeff Fowler

data breach

Data Breaches are a common talking point in cybersecurity. This is because there’s such a wide array of methods cybercriminals are using to attack businesses. Whether it’s malware, social engineering, or exploiting weak passwords. Any company can be a target, from Fortune 500 companies to small, family-owned businesses. In our blog post, we’ll be discussing a few ways that a data breach can completely devastate your business and some things you can do to prepare.

1. A Data Breach Can Be a Legal Nightmare

If you are maintaining and storing someone else’s data, you’re directly responsible for complying with data privacy laws and regulations. It’s your business’s responsibility to protect and guard the data. If you are breached, you can be held liable and can face legal action. This can include but not be limited to fines and other legal penalties.

In one recent data breach, Equifax paid out more than $700 million to affected customers in the US as a result of a data breach. With the rise of breaches in both quantity and severity, law firms will continue to push lawsuits against those responsible for the breaches. This could be your company on the receiving end of one of these lawsuits.

2. Data Breaches Can Cause Long Term Reputational Damage

One of the biggest damages of a breach comes at the expense of your company’s reputation. Market research shows that businesses can lose upwards of 50% of their customers after a data breach. In today’s fast-paced social media and news, knowledge of a breach tarnishing your reputation can be global  within a few hours. The drop in consumer trust and confidence combined with the negative press can cause reputational damage that’s long-lasting and can even put a damper on new customers and potential investments.

3. Financial Loss is a Consequence of a Data Breach

One of the most intimidating and hardest-hitting impacts of a Data Breach is the financial consequences that an organization must deal with afterward.

“The average cost of a data breach to an organization was around $4.24 million (USD) in 2021”

IBM – 2021

This number continues to trend upwards. As an insult to injury, you can also face fines from agencies such as PCI DSS and GDPR.

4. Downtime Caused by Investigation and Containment

An often unknown consequence of a data breach is the responsibility of the business to perform a full investigation in order to determine the cause and origin of the breach. In addition to being costly, these proceedings can disrupt day-to-day operations. It’s even entirely possible that the business will need to entirely shut down while investigators gather information to get the answers they seek. This process can take weeks or even months, depending on the severity of the data breach. This can cripple revenue for the affected business and hinder the path to recovery.

5. Sensitive Data Can Be Completely Lost

Most businesses collect personal data about their customers and employees. What would happen if this information fell into the wrong hands? If you are in the medical field, this is especially concerning. Extreme repercussions can occur if a patient’s information, such as medical records, are compromised. This set of data ranges widely because of the type of business you have. As a result, things like photos, phone numbers, email addresses, and other personal information can directly identify an individual.

So, What Can We Do?

No matter how prepared you are as an organization, there’s no room to remain stagnant in the world of cybersecurity. Your business must continue to develop an effective IT strategy to protect your data, as well as your customers.


SandStorm IT has some of the best tools and knowledge available on the market today. Our solutions are directly catered specifically to your business. We love partnering with businesses in the Greater Memphis area on their IT. Schedule a call to discuss how we help you with all of your IT needs. We offer a free email scan to see if your information is already out there and available to attackers. You can then take action and be better protected based on the results!

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