There have been so many cyberattacks against businesses in recent years that organisations are tallying most of the caused damages in numbers.
Responding to cyber threats such as data leaks often costs companies not only money but also time and psychological resources. But data breaches can go so far as to impact brand reputation and brand-customer relationships. Things are becoming even more alarming as global spending on cybersecurity was almost 72 billion US dollars in 2022 alone. So, it’s not surprising that increasingly more companies are strengthening their online privacy practices and looking for innovative methods to keep sensitive data safe and sound from the curious eyes of malicious individuals. Nonetheless, enterprises’ attempts to keep abreast of the cybersecurity technologies out there seem almost in vain, as the more advanced these technologies become, the more sophisticated hackers’ tactics will be.
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The impact of a data breach is undoubtedly devastating both in the short and long term. And understanding it is crucial so that you can take the right steps and protect your corporate data proficiently.
Data breaches could lead to considerable and immediate financial implications that modern companies find challenging to handle. Detecting and responding to a data breach might be a million-dollar race if we consider the average cost of such an online threat. Data show that this went from $3.86 million in 2020 to $4.24 million in 2021. In 2023, it could be even higher as cyberattacks are on the rise. Digital transformation is indeed one of the leading things luring hackers, but we think there is more. It could be the lack of awareness regarding a data breach’s consequences or companies’ failure to employ the right measures and tools and provide thorough security training among employees.
There are multiple manners to lose financial resources after a data breach:
- Legal fees and fines
- Doubling down on your PR and marketing efforts in an attempt to minimise long-term reputational damage and regain customer trust
- Money spent on a potential investigation of the entire affair
- Further incorporating breach response strategies (complementary credit checks, help desks for affected parties, and so on)
- In some cases, you have to pay directly for customers who might have been affected by the data leak
Data leaks leave digital marketers scrambling
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Data breaches can impact all business operations, including the activities of the digital marketing team. Depending on the severity of the situation, a data leak often requires marketers to put things on hold in order to do damage control. This, of course, costs money. But it also costs customer trust. Everything from ruined A/B tests and interrupted social media campaigns to stopped ad campaigns is a possible consequence of a data breach. Needless to say, these disrupted campaigns can bring you into a situation where you’ll be forced to make compromises.
Apart from fines and lawsuits, which are by no means pleasant to deal with, you might also find your digital marketing team in such a delicate situation where the stress suffered might convince them to quit. Some GDPR breaches can result in considerable financial losses and great distress – that’s why we recommend taking legal action in case your company ever falls prey to cyberattacks of the sort. Claiming compensation for a data breach in the UK is reachable with the help of a specialised lawyer who could help direct your steps. Perhaps you won’t be able to regain the psychological resources lost, but material losses would be almost – if not even completely – compensated, and that would certainly help you and your team get over that much more rapidly.
Reputational damage and loss of customer loyalty
A company’s brand develops tangible relationships with its customers. And that’s the ultimate goal, after all. But what happens when a cyberattack leaves consumers with their personal information compromised? Well, they’re likely to lose trust in that company’s security policy and become less engaged with it. It’s only normal to be so since a brand is responsible for the safety of its customers, whose data it collects for marketing purposes. Data about customers is commonly referred to as Personally Identifiable Information (PII), and hackers often target this information to gain access to people’s bank account details.
According to a 2020 report on the cost of a data breach, almost a third of clients in the healthcare, finance, and retail industries will lose faith in breached companies and stop doing business with these enterprises. That’s because customers are well aware of the value of their shared information, and in the case of the unthinkable, they will demand answers to all the mess and most probably move on to a competitor.
Losing customers is perhaps the most significant implication of a data breach, all the more so since the failure to acquire new ones often accompanies this. Therefore, ensure you don’t take cybersecurity lightly – implement the best measures and technologies to help your business thrive even in the worst of times.
Some of the best things you can do are to rely on robust passcodes, update your systems regularly, back up your data, and train your staff adequately.
The impact of data leaks on MSPs
A data breach can also impact managed service providers (MSPs). These are third-party companies that collaborate with businesses, mostly Small and Midsize Businesses (SMBs), having the purpose of managing their Information Technology (IT) infrastructure and end-user systems. In the case of a data leak, both these MSPs and the organisations they’re working for must have a well-defined cybersecurity incident response plan in place. This will allow them to quickly identify what data was compromised, where the breach originated, and what measures could be immediately employed to mitigate the risks.
MSPs have to be fast in reporting the breach to remain in conformity with the GDPR regulatory agency. Even if there are no clear guidelines regarding data breach notification, it’s better to take action and ask for help as soon as a leak is spotted in the system than to be at risk of losing it all.
With that in mind, ensure you protect your business from the threat, as there are not just financial losses at stake but also customer trust and hence impacted marketing efforts.