No one can forget the cybersecurity breach that hit Target in 2013. The security breach affected over 70 million customers.
Names, addresses, phone numbers as well as credit and debit card information were stolen in a cybersecurity data breach, the scale of which shocked the nation. The company ended up paying up more than $148m in penalties and damages following the incident and litigation.
Since then, many other companies, large and small, have reported cyberattacks. Some of these incidents have amounted to millions of dollars in losses for companies, while some have only cost them a few thousand dollars. However, many businesses are now realizing that the true impact of cyberattacks goes beyond the obvious expenses.
A recent study by Deloitte on the impact of cyberattacks found that visible costs such as, customer breach notifications, regulatory compliance, litigation, attorney fees and technical investigations, were less significant than hidden costs such as lost business and brand name devaluation. The study found that the visible costs contributed to only 5 percent of the total impact to the business.
The true impact of cyberattacks
The true impact of a cyberattack will usually be felt by a business several weeks or months following the attack. With so much riding on information technology, cyber security goes beyond the effect on technology; instead it effects people.
Businesses and individuals are affected by cybercrime in various ways.
- Increased insurance premiums
Many businesses are investing in cyber liability insurance carriers. While this is wise, it isn’t a substitute for putting in place the right cyber security measures. If your business has a data breach and you make a claim, you’re likely to suffer an increase in your insurance premium.
CyberPolicy recommends comparing cyber liability insurance carriers to find the best policy for your business. Ensure that you invest in cybersecurity and keep your security systems up to date to prevent future incidents.
- Operational disruption
Many business operations depend on computer systems. When a data breach occurs, these systems must be shut down or taken offline until the issues are resolved. This downtime can cost the business thousands in revenue. You will lose current and potential customers to the competition as a result of not being able to meet their needs.
- Loss of customer trust
One of the biggest losses any business can experience when affected by a data breach is a loss of customer confidence. Customers aren’t likely to share information or do business with a company that leaves their most valuable data at risk. This can result in great losses in the long run.
Target was able to meet the visible costs of the data breach, which amounted to $148 million. However, the long-term financial repercussions resulting from the loss of customers will amount to much more over time. A loss in customer confidence and trust cannot be easily calculated.
- Damage to the company’s reputation
For a company to succeed in today’s highly competitive market, it’s important that they maintain a good reputation. A data breach can result in the devaluation of your company’s brand. Regaining your footing in the marketplace can be difficult once this has happened. It can take time to change the opinion of your target audience as well as vendors and suppliers.
Cybersecurity is about the customer
These are only a few of the many long term and less visible impacts that data breaches have on companies. It is important for businesses to realize that cybersecurity is less about technology, and more about the customers these breaches effect. It is about building a lasting relationship with your customers and vendors. It is about maintaining a brand.