The Impact of Security Data Breach


According to a Risk-Based Security study report, in the first nine months of 2019, 5,183 breaches were recorded, exposing more than 7.9 billion compromised data. The overall number of breaches was 33.3% more in 2019 than in 2018, while data revealed more than doubled, increasing by 112%.

Unfortunately, the alarming rise in data breaches has not been accompanied by an improvement in organizational readiness. Unfortunately, many organizations are poorly unprepared for a cyber assault and have failed to take the necessary steps to ensure their networks are secure.

According to a Kaspersky Lab research, more than half of those surveyed (57%) stated they did not have a Cyber Security strategy in place, with medium-sized companies accounting for the majority (71%) of those without one (250 to 549 employees).

A company’s lax approach to cyber security puts them at risk and targets regulators and consumers alike if there is an incident.

To minimize risk and protect against attack, organizations must understand the wide-ranging ramifications of a data breach on their company. This underscores the importance of investing in reliable cyber security services. Otherwise, companies will have to deal with a security breach that has a variety of catastrophic consequences, including the following:

Loss of Money

A data breach’s financial effect is unquestionably one of the most immediate and severe repercussions for organizations. Recovery from a single security incident costs an average of $86.5K for small and medium-sized companies and $861K for large corporations. Zero-day vulnerabilities and tailored assaults are the most ‘cost’ attack kinds. A Ponemon Institute research found that the average worldwide price of a data breach has increased by 12 percent in the last five years, reaching £3.2 million.

Customers can be compensated, incident response efforts established, an investigation into the breach is conducted, new security measures are invested in, and legal costs are incurred, not to mention the potentially crippling regulatory fines for non-compliance with the GDPR (General Data Protection Regulation).

Those companies who violate the GDPR face fines of up to 4% of their worldwide annual sales, or €20 million (whichever is greater). However, if companies believe these financial penalties will not be enforced, the recent fines levied on British Airways, and Marriot should wake them up.

Also, the share price and value of a business can be substantially impacted by a security breach. Approximately 14 trading days after a breach, the share values of compromised companies fell to their lowest point. The average price of a stock is down 7.27%, underperforming the NASDAQ by -4.18%. Following a breach, share prices for financial and payment services firms fell the most, while those in the healthcare industry were the least impacted.

This is precisely what happened to Yahoo in 2013 when a data breach occurred there. The hack was discovered in 2016, just as Verizon was preparing to buy the business. The deal went through, and The firm purchased yahoo for a reduced price of $4.48 billion, or around $350 million less than the initial asking price.

Damage to One’s Reputation

data breach concept

A data breach’s impact on a company’s reputation can be severe. More than a third of the average total costs of a data breach are attributed to lost revenue – including increased customer turnover, income lost due to system downtime, and the rising cost of acquiring new business due to diminished reputation – which has risen from $1.42 million in the 2019 study to $1.52 million in the 2020 study.

According to studies, up to a third of consumers in retail, banking, and healthcare will no longer do business with companies that have been hacked. In addition, 85% of people will tell others about their experience, and 33.5% will use social media to express their frustration.

News travels these days quickly, and a security compromise can turn a company into a worldwide news story in a matter of hours. Adverse publicity and a deterioration in customer confidence can do irreversible harm to a business that has been compromised. As a result, customers are acutely aware of the need to protect their data, and they will switch to a rival that takes security more seriously. Damage to a company’s reputation can endure for a long time and harm its capacity to attract new customers, future investment, and new hires.

There will be severe ramifications if a data breach exposes the sensitive personal information of customers. Information that can be used to identify a specific individual is considered confidential data. Everything from a person’s name to their email address, IP address, and even images will be included. Biometric or genetic data, for example, can be used to identify an individual if processed.

No matter how well-prepared your company is for a data breach, the current state of Cyber Security leaves no space for complacency. Secure your brand’s reputation by implementing a well-coordinated security plan that protects sensitive data and minimizes risks.

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