5 Costs of Cybersecurity Breaches and How They Impact Your Business
Accounting for more than $12 billion in total business losses, the costs of cybersecurity breaches are impacting businesses’ bottom lines more often than ever. The cost of a single data breach averages $149K. With a price tag like that, it’s no surprise that some businesses close their doors after an attack, unable to recover from the damage caused.
Cyberattacks are varied and can result in different costs to your business, some you may not have even considered. It’s important to understand your business’s cybersecurity risks so you can be better prepared when the worst happens.
5 Costs of Cybersecurity Breaches
1. Ransomware Costs
Ransomware attacks lock a business’s data and files and then demand a ransom to provide access to them. The average cost of a ransomware demand is $116K. Even if you can cover the costs of this cybersecurity breach, there are no guarantees you’ll recover your files even if you pay the ransom. We recommend NEVER paying a ransom. But the fact is that businesses are under tremendous pressure to pay if all of their critical data could potentially be lost.
No one is immune from such attacks. While the news is full of high-profile attacks like the Colonial Pipeline, the fact is that criminals are also targeting small businesses. Just because your business is smaller, that does not mean that you will avoid the attention of hackers. In fact, criminals are focusing much of their efforts on small businesses since they often have weaker security protocols and less reliable backups.
But there is a way to recover from a ransomware attack: with up-to-date data backups, you can restore your data without worry. Plus, we have more tips about what to do if you are infected by a ransomware attack here.
2. Erosion of Customer Trust
Customers are already leery about how their sensitive data is protected, and a data breach would erode their trust even further.
A data breach will cost you in two ways:
- Customers will be less likely to use your website, business, or service.
- To regain their trust, you may need to consider compensation and or upgrade your security systems and protocols.
According to a study by PwC, only 25% of consumers surveyed thought companies would handle their data responsibly. And 87% of consumers will not use a business if they feel that the business is not handling their data properly.
Regaining customer trust can be accomplished, but it does have a cost. When consumers were asked “What’s the best way for companies to regain your trust after a hack or other data breach?”, these were the top responses:
- 27% said to compensate victims for the breach.
- 22% said to be honest with customers about what happened and how you are resolving it.
- 20% said to provide proof that you’ve put the right systems in place.
Protecting your business means protecting your customers as well. Initial investments in cybersecurity might protect you from a larger cost of a cybersecurity breach in the future. Learn more about protecting sensitive data here.
3. Employee Downtime
According to the consulting firm IDC, a single downtime event typically costs small businesses between $82,200 to $256,000. Based on the average length of downtime, that breaks down to $137 to $427 per minute.
But what will downtime cost your business? This formula by Data Foundry can help you determine the cost of downtime: Revenue loss = (GR/TH) x H
GR = gross annual revenue
TH = total annual business hours
H = hours of downtime
The good news is that it’s possible to avoid most unplanned downtime. With a robust backup and cybersecurity plan, you can protect your business from the high cost of downtime. Read more here about security consulting services and how they might help you.
4. Lost Data
Time and time again we see businesses who think they have backed up their data; but for some reason, the backup didn’t happen.
Maybe someone forgot. Maybe it’s incomplete. Maybe it’s a backup that’s so old it’s useless. Whatever the problem, it can have a serious impact on your business if you are attacked.
Unfortunately, when a cybersecurity attack happens, a huge cost of that cybersecurity breach is significant data loss. Lost data can have a significant cost in labor costs to recover the data. Sometimes, when data can’t be recovered, a business can’t survive. It’s important to have backups – and have someone monitoring to make sure they’re happening through a managed backup.
Do you know if your data is safe? Read more here.
5. Legal and Regulatory Liability
Businesses that must follow regulatory guidelines could face regulatory fees or financial liability if they fail to maintain appropriate protections.
For instance, Payment Card Industry Data Security Standard (PCI DSS) requires that any company processing, storing, or maintaining credit card information does so in a secure environment. Failure to take appropriate safeguards can cost you in the form of fines and possibly even cause you to lose your merchant account.
If you are in the healthcare industry, HIPAA (Health Insurance Portability and Accountability Act) requires that you protect sensitive information about healthcare patients while allowing patients rights to their own protected health information (PHI). If patient data is stolen, and it can be shown that you did not take proper precautions to protect it, you could be liable.
Whether you’re in an industry that is highly regulated or just use credit card services, a data breach can cost your business. SandStorm IT can provide an audit or help correct compliance issues.
Protect Yourself Against Expensive Costs of Cybersecurity Breaches
Could your business survive one or several of the 5 costs of cybersecurity breaches? At SandStorm IT, we’ve made it our mission to ensure that businesses can survive whatever cyberattacks come their way. If you’d like to learn more about our cybersecurity consulting services visit us here or give us a call at 901-475-0275.