Reviewing the Consequences of a Data Breach

The consequences of a data breach can be devastating if it catches you unprepared. Read this article to learn about some potential risks.

Blog Post

6 minutes

Jun 30, 2023

There’s been a sharp increase in the volume and frequency of large-scale cyberattacks in 2023. According to IT Governance, there were already over 300 confirmed cyberattacks between January and March of this year. With that in mind, it’s vital for business owners and leaders to understand the consequences of a data breach and to conduct an audit of their own cybersecurity posture. 

Cyberattacks can bring about a variety of negative results including but not limited to a loss in revenue, lost consumer trust and brand reputation, downtime, and even a drop in market cap and stock price. This is all in the case that the business is able to bounce back from the cyberattack at all.

“Cyber attacks on all businesses, but particularly small to medium sized businesses, are becoming more frequent, targeted, and complex. According to Accenture’s Cost of Cybercrime Study, 43% of cyber attacks are aimed at small businesses, but only 14% are prepared to defend themselves.

Mike Mclean

Committing to a cybersecurity culture in your organization can help you fortify your defenses upfront, add you to the group of businesses prepared for a cyberattack, and give you the peace of mind that you’ll be resilient in the face of a cyber threat like a ransomware attack. 

Recent history is showing us that without the proper cybersecurity protocols in place, the consequences of a data breach or cyberattack are highly detrimental.

To gain a better cybersecurity posture, you need to understand the differences between IT security and cybersecurity. To gain a better cybersecurity posture, you need to understand the differences between IT security and cybersecurity. Listen to this webinar with Impact’s experts to learn about the key similarities and differences between IT security and cybersecurity standards. 

In the Short Run

There are immediate repercussions that cybercrime victims face. For publicly traded companies, one of the most severe, and nearly instant, consequences is a dive in stock price. On average, public companies see a stock price drop of 7.5% after a cyberattack.

“Publicly traded companies suffered an average drop of 7.5% in their stock values and a mean market cap loss of $5.4 billion per company, and it reportedly took 46 days, on average, for those stock prices to return to their pre-breach levels. To date, the stock price of Equifax has not yet recovered.”

Kacy Zurkus

Another major area of concern for business owners and operators is the downtime that a successful cyberattack causes. Downtime is how long your vital systems are offline or inoperable. During periods of downtime, your organization won’t be able to handle basic everyday operations or handle consumer requests.  

Downtime is extremely expensive and can essentially paralyze an organization. A 2016 study by Ponemon Institute estimates the cost of downtime at $9,000 per minute. This study is over 5 years old at this point, but clearly demonstrates how rapidly the cost of downtime is accelerating.  

It’s also worth noting that these downtime cost-figures are for large scale organizations. The same studies suggest a more accurate cost/minute figure for small-medium sized businesses is between $137-$427. 

The increased cost of downtime coupled with the rising frequency of cyberattacks makes modern cybersecurity practices a crucial aspect for any modern organization. Especially considering that 40% of downtime instances were caused by cyberattacks and a matching 40% of organizations were subject to a ransomware attack in 2021.

Looking at the Long Run

Diminished stock prices and downtime expenses are just a couple of the immediate consequences of a data breach that organizational leaders need to address following a cyberattack or data breach. Unfortunately, though, the hailstorm doesn’t stop there.   

Beyond the immediate financial dip that businesses experience after a data breach are more long-term effects that hinder or halt organizations altogether. One of the largest influences a data breach can have on your organization is how it effects your reputation among consumers.  

Reputation can take decades to earn and seconds to lose. Consumers are also putting a stronger emphasis on cybersecurity and data privacy in choosing which brands to patron. In fact, 25% of consumers won’t consider your brand an option following a significant data breach or downtime caused by a cyber incident.  

One of the nice things about working with an IT managed services provider is that you don’t have to worry about downtime nearly as much as they’ll have the professionals in place to keep security top of mind.  

This shows how neglecting cybersecurity practices in your organization effectively removes a full quarter of your target market during a time when you’ll need them most for recovery, in turn capping your ability to grow the organization and even hindering additional expansions into secondary markets.  

The reputational damage suffered from a data breach doesn’t even necessarily end there. That’s because close to two-thirds of organizations raise their prices, which hits the consumer directly in the wallet and can push customers to choose an alternative brand.

“Additionally, these costs can pass on to customers and investors, limiting a company’s ability to maintain its market position. For example, 60% of organizations that have experienced data breaches have raised their prices.”

While passing the bill onto the consumer might mitigate some of the increased costs cyber victims face, it also further diminishes an already depleted target audience due to a loss of trust in your organization. 

Auxiliary Costs Also Increase 

Not only does a data breach wreak havoc on you financially in the short run and hurt brand reputation in the long run, but it also increases your overall cost of doing business. There are two main contributors to the increased cost of operations.  

The first is an increase in the rates a company will have to pay for cyber insurance in the future. These rates are calculated on a variety of risk factors, just like other insurance policies, but are typically driven upward by incidents like a data breach.  

The other major contributing expense to the increased cost of doing business comes from interest rates. Companies find it more difficult to attract partners and investors following a cyberattack or data breach. On top of that, lenders may charge higher interest rates on borrowed capital.  

These increased costs put an even heavier financial strain on companies following a data breach making it vital to prioritize cybersecurity practices from the get-go.

A Final Word on the Consequences of a Data Breach 

The consequences of a data breach span across the entire scope of your organization. Reaching from immediate financial impact to long term brand repercussions, a data breach or like cyberattack can pin your organization between a rock and a hard place.  

To give yourself the best chance at avoiding a major data breach, prioritize IT security and cybersecurity practices in order to create a security-based culture. 

Cybersecurity is becoming a necessity among modern businesses in a digital-first economy. Commit to keeping your systems secure with a comprehensive security strategy that spans both IT security and cybersecurity by watching Impact’s webinar.  


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