Data revolution in the business world has come with its consequences. One of which is cybercrimes. Cyberattacks are malicious activity conducted against the organization through the IT infrastructure via the internal or external networks, or the internet. It is a growing, global problem. Whether you are a startup, a mid-level enterprise, or even a conglomerate, everyone is storing data either personal or customers. Therefore, to protect the data businesses must be aware and implement a security strategy in case of cybercrime.
Every online data breach exponentially increases security costs. Eventually, it comes down to consumers in the form of increased prices. On top of this, COVID-19 has ramped up remote workforces, making a clear way for cyber attacks.
According to a report by Accenture, 68% of business leaders feel their cybersecurity risks are increasing. In this article, we will take a look at how data breaches have influenced budgets and risk assessments in businesses.
Increase in Financial Costs
A report from IBM and the Ponemon Institute shows a 10% rise in cybersecurity costs over the last five years. The cybersecurity costs include a combination of direct and indirect costs.
Direct costs are related to the production of specific goods and services. So if a data breach occurs it will hamper time and effort in dealing with the ransomware. In turn, it may delay the submission of the final product and service. Eventually, tarnishing the reputation and increasing the direct costs.
On the other hand, indirect costs extend beyond the expenses a business incurs while producing a product or service. Also, it may include the costs involved with maintaining and running a company. In simple words, indirect costs are the leftover costs after direct costs have been computed. In case of a cyber attack, the indirect costs will shoot up in the form of malware in office technology, fines, and damage payments, disruption in accounting and payroll services, etc.
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Operational Disruption
A data breach can be a shocking event that requires time for investigation and recovery. Meanwhile, all the operation-related processes will be halted. Although, some cyberattacks may lead to loss of confidential information that breaks the chain of operational processes. Many companies have shut down their operation in case of a similar data breach.
Because, if the cause and recovery plan is not planned, there is a high chance an opportunistic cyber attack can happen again. Therefore, it is crucial to scrutinize the source of the breach and chalk down a plan to tackle the consequences.
Altered Business Practices
Cybercrime can not only impact business financially but also strategically. By this I mean, enterprises have to reevaluate how they store and collect information to ensure better security. Various enterprises have consciously stopped collecting the financial and personal information of their customers. As a result, increasing the trust in their brand value.
However, some businesses have shut down their online store for the fear of losing their valuable data. Nowadays, customers are also well aware of how businesses handle cybersecurity issues. Moreover, they only choose the enterprises which are frank about their security practices and processes.
Reputation Damage
It is inevitable for a company to not lose its brand value in case of a big cyberattack. Customers will think hard before investing in your product and services because their confidential information will be at stake.
JPMorgan Chase & Co. (JPM) lived on when ransomware compromised the data of its banking customers. Hackers were able to steal names, addresses, phone numbers, and even email addresses of 76 million household accounts and 7 million startups accounts. Moreover, research backs the theory that publicly traded companies are likely to see a short-term drop in market value when hit by a cyber attack.
Stolen Intellectual Property
The company stands out among its peers by its product designs, technologies, and business practices. However, intellectual property is mostly stored in the cloud, a space most vulnerable to cyberattacks. Hence, a reliable cloud product is a necessity for every enterprise.
The bottom line is why should enterprises and individuals care about digital security? It’s because protecting a business against data breaches is costly and the security costs can hamper the overall budget of an organization. In fact, a cyber attack can impact the relationship between the company and its customers. Therefore, for improving overall data security, a business has to invest more in enhancing data security and protection. Over time, businesses have to implement security measures as their prime objective.
