Data breaches have been a common problem experienced by most businesses in the past few years. However, unless you have been a victim yourself, you probably have no idea up to what extent this problem can do to your business!
To avoid these security issues, one must be knowledgeable enough about the consequences it comes with. Knowing these possibilities will help you see things from a much better perspective and urge you to prepare for it even better.
What is a data breach?
A data breach is an unauthorized access and intentional or unintentional release of any secured, private, or confidential information to an untrusted environment. According to IBM Security, companies have a 28 percent chance of experiencing a data breach of at least ten thousand records.
Becoming a victim of this cyberattack can hurt a business and also its consumers in several ways. To give you a better idea, here are some ways that it can affect your business:
#1. It damages your finances
Whether you have a small customer database or millions of personal records on hand, a data breach that exposes this information can cost you much! It is an expensive ordeal to go through, and each year, the financial impact of this cyberattack increases.
The same IBM Security report says that the average cost of a data breach in 2020 is $3.86 million. Unless you have that extra business money, your business is bound to a death blow. As a matter of fact, this security problem can even damage large corporations’ finances and revenue entirely!
#2. It impacts your company’s stock value
On top of the financial damage, your company’s stock value will also be affected. In a 2017 study by the Ponemon Institute, they found that the stock prices for companies with a data breach dropped by an average of five percent after publicly announcing their security issue.
The same study also said that companies that responded to the breach quickly gained back their stock price after around seven days. Meanwhile, companies that responded slowly and had a poor security posture undergo a slow recovery and even had the most significant drop in stock prices.
#3. It pulls down your brand reputation
A company’s reputation is not a measurable asset, but it exists—impacting your customers’ and investors’ attraction and retention. Any company with a low reputation will never attract top talents. They will also struggle to find support from stakeholders, effectively hampering business operations even further.
Unfortunately, a cyberattack such can instantly lose you customers and revenue. The same study by the Ponemon Institute revealed that data breaches are considered as the second top reason that harms a brand image, following inadequate customer service on top.
This kind of damage takes a long time to repair, primarily when not managed correctly. If you are a small company with insufficient security preparation for a data breach, your business reputation and value may suffer irreparable damage.
#4. It collapses customer trust
Customer trust is the most challenging to gain, easiest to lose, and the most difficult thing to earn back. When customers allow your business to get their personal information, they begin to build their trust with your company. They believe that you will keep their data private and secure. Failing to do so immediately makes customers lose faith in the business as a whole.
In a survey found in the same Penomon’s study, 65 percent of the data breaches victims lost trust in the company, and 27 percent stopped doing business with the company. This incident can result in higher customer turnovers. When there is no stable customer base, your business revenue flow becomes less predictable—and it can bring a challenging future for your business.
With the rise of technological advancement, cyberattacks, such as data breaches, have also become frequent and costly. Even if you consider your business a victim, these cyberattacks can ruin your reputation and damage your customers’ trust. Small businesses are not exempted from these attacks; instead, they are even more targeted. The tightening of security measures and routinary reassessments of company procedures can better protect consumer data and storage.
Make sure that your business is always secured from cyber threats! If you need any computer repair services in Greenwood, Indiana, such as data breach recovery or virus forensics, Finchum’s Computer Services can take care of your computer needs. We are your one-stop-shop for IT consulting services, ready to meet any of your technological needs. Contact us today!