There’s a worrying increase in the number and severity of cybersecurity breaches, which can have serious cost implications for any business. Whether the loss of data is due to intentional, malicious or accidental causes - a data breach can threaten business continuity, result in large penalties and fines, and may even result in loss of brand reputation. 

One thing is for sure - the costs associated with cybersecurity breaches are far greater than the cost of preventing them. In fact, you could save millions of dollars (depending on the size of the company and type of breach) by implementing effective cybersecurity defenses and monitoring of threats. 

According to a 2021 Cybersecurity Ventures report, the cost of cybercrime could reach $10.5 trillion each year by 2025.

Does your business have a cybersecurity strategy and do you have the most cybersecurity technology and systems in place to keep you protected? If not, NB Technology is specialized in helping businesses of all sizes to create robust cybersecurity solutions.

8 financial costs associated with a cybersecurity breach 

There are a variety of different financial cost implications of any cybersecurity breach. Of course, the actual amounts will vary depending on the size of the breach, size of the organizations, the type of data that is lost or leaked and the industry you work in. 

Below are 8 different types of costs associated with cybersecurity breaches that you may not be aware of. Once you start visualizing and contemplating all of these possible costs, it becomes increasingly clear that preventative action is worth the investment and far less expensive than most breaches.

1. Data loss

Many businesses are specifically targeted by cyber criminals because of the data they store. That data can be stolen, leaked, or held for ransom. And your data may be lost or erased permanently. 

Some of your company data could contain intellectual property and company patents or secrets. Your data could also hold information about persons that identify individuals.

Losing these types of data can jeopardize your company’s long-term growth, and if deleted, could even lead to the termination of the business altogether. If you don’t take enough steps to protect certain types of data, you can also be legally liable which could bankrupt your business in legal fees and penalties.

2. Cost of business disruptions 

If your data is lost, destroyed, or held ransom, your business may not be able to operate effectively or at all. Depending on how much time it takes to fix the breach and recover any lost data, there could be serious financial losses associated with the inability to conduct business. 

Even the costs to repair and patch security breaches, equipment or infrastructure could be very costly and could take a significant amount of time which may further disrupt business as usual. 

Depending on the precise nature of your business, there can be a myriad of connected business costs associated with decreased operational abilities. For example, if you sell products and are not able to deliver them - or if you provide a service but are no longer able to communicate with all your customers - you may be liable for late delivery or your lack of service provision.

3. Cost of responding and conducting data recovery

It can take a considerable amount of time, expertise and resources to pinpoint and respond to a data breach, and to then implement data recovery and restoration. 

You might need to hire specialists and this can cost a lot of money. And if you aren’t able to figure out the source of the data breach effectively, you may be liable to have it happen repeatedly.

If your business doesn’t have a disaster response and recovery strategy in place, then it can take even longer and be even more complex to quickly respond to any breach - driving up costs further and extending downtime.

4. Loss of customers and reputational damage

If you experience a serious cybersecurity breach, your customers may get annoyed by your lack of service. And even worse, if their personal data is compromised, your business may also experience a lack of trust and loss of reputation. It may be difficult to recover from this type of damage.

5. Loss of cash due to ransom payments

Many cyberattacks come in the form of ransomware, where your data is held for ransom and cybercriminals demand huge amounts of money to give you back your data (which may or may not happen once you pay).

If your company decides to pay the ransom amount, it may cost significant amounts of money which is typically demanded in digital cash.

6. Cost of legal penalties and fines

Depending on the type of data that was involved in your breach, your industry and how quickly you were able to respond to the breach - your organization may be liable for significant legal penalties and fines. Not only that, but the cost of your attorney fees could be devastatingly large. 

This is particularly relevant for organizations that store large amounts of personally identifiable data and in certain industries like the healthcare and financial sectors. And if it’s found that you breached compliance, then there could be other penalties like the revocation of licenses and the inability to trade. 

To illustrate how massive these costs can be - consider that Uber was made to pay $148 million in fines in 2016 following a cyber breach. And if you are tempted to try and hide a breach without disclosing it - be aware that that can result in even larger fines. Equifax for example was ordered to pay $575 million after failing to inform its customers of a breach.

7. Increased insurance premiums

Given the rise in cyber threats and risks, many businesses are taking out cyber insurance in an attempt to mitigate their risks. 

However, if your business experiences a cyber attack, then your insurance premiums may go up - which can also result in your monthly business operating costs increasing. 

8. Loss of intellectual property

If a hack or cyber breach results in your businesses’ intellectual property being exposed or stolen. That could include patents, secret recipes, copyrights, or your business strategy. 

If that information is made public, then the competitiveness of your business may be at risk and others may use your trade secrets to replicate your business offerings. That can result in a loss of customers, business partners and investors. 

How to minimize the risk of a data breach and associated financial loss

It’s clear that the financial costs and implications of a data breach can far exceed the costs of taking action to minimize and avoid a cybersecurity attack or data breach.

These are some of the many actions your business can take to minimize the risk of a data breach:

• Adopt a zero trust strategy across your business
• Implement conditional access
• Keep software updated
• Create a cybersecurity policy and strategy, as well as a backup and disaster recovery plan 
• Train your staff regularly on how to avoid cyber security breaches, scams and attacks
• Use multi-factor authentication
• Secure all endpoints
• Use data encryption
• Have a password policy
• Use reputable antivirus software
• Active monitor for cyber threats 
• Ensure compliance with any relevant laws and regulations

Want to enhance your cybersecurity defenses?

There’s no time to waste when it comes to protecting and securing your data. Contact us at (704) 644-1220 for a no obligation consultation to see how we can help you assess and enhance your cybersecurity defenses - and any other enquiries you may have.

At NB Technology, our team of cybersecurity experts are here to help you and can provide you with services to detect cyber threats and risks, maintain regulatory compliance, and arrange staff cybersecurity awareness training, amongst other things.