We are in a digital era and data is the lifeblood that keeps businesses moving. It fuels decision-making, customer interactions, and daily operations. However, there is also a dark underbelly of this data-focused landscape and it's the constant threat of data breaches.
A data breach impacts a business for years to come with only 51% of the impact occurring within the year of the break and the other 49% impacted in year two and beyond.
Image source: IBM’s Cost of a Data Breach Report 2023
The 2019 cybersecurity breach at First American serves as a bleak reminder of how long the consequences of a data breach linger including a $1 million fine from the New York Department of Financial Services (NYDFS). The NYDFS fine was given for failing to safeguard sensitive customer information when over 880 million documents were exposed, including personal and financial data. Resulting in First American Title Insurance losing consumer trust and most likely customers on top of being fined.
The financial impact of a data breach is serious. Some of the immediate costs are:
A breached business faces long-term expenses related to legal battles, regulatory fines, and reparations. As well as the possibility of class-action lawsuits.
A negative impact on a business's reputation can arguably be the most lasting consequence. When a customer loses trust in a company's ability to protect their sensitive information, it can also result in a decline in customers and long-lasting damage to a brand's image.
When it comes to rebuilding a damaged reputation, it takes time and a lot of effort. Not only will companies have to increase their security measures after a breach, but a public relations campaign to help assure stakeholders of a renewed commitment to data protection will be needed.
Regulatory bodies continue to hold businesses accountable for safeguarding their customer's data. They take a stringent stance on data security as well as companies that fail to meet cybersecurity standards. When a data breach occurs, it triggers regulatory scrutiny. Which may lead to fines and continued compliance requirements. Not only does a fallout include financial penalties along with increased oversight and mandatory security improvements.
The aftermath of a data breach disrupts normal business operations as companies have to make remediation efforts and enhance their security measure. Which, in turn, can divert resources away from core business tasks across all departments. This ripple effect of operations disruption can continue for years, interrupting growth and the ability to adapt to industry and market changes.
Individuals lose confidence in the business's ability to protect their data, leading to customer churn after a breach. Potential clients are also wary of associating with a brand that has suffered a breach. This makes acquiring new customers a challenge and can hinder a company's growth.
As stated above a data breach can impact the financial health and reputation of a business for years. As well as its regulatory standing.
Even more troubling is the frequency and sophistication of cyber threats continue to rise. Now is the time when businesses need to be proactive and increase their cybersecurity measures as soon as possible. Taking steps immediately means safeguarding the long-term success of a business.
There are countless ways that hackers can breach a network. From endpoints to cloud tools, you have to run a tight security ship. N-Tech Consulting is here to help batten down the hatches and keep your data safe.
Schedule a cybersecurity assessment today. This is the first positive step into understanding and addressing your risk as well as avoiding the consequences of a data breach.
Give us a call today at 855.711.6601 to schedule a chat.
