Effects of a Data Breach on Your Business

Why do most people live in houses instead of the open and wear cloths instead of going about naked?

It’s all about their Privacy! Humans all cherish their privacy in one way or the other and they can go to any length to protect it and possibly take legal action on anyone who invades their privacy without their consent.

Why is it that users are not as protective over their personal data?

In today’s digitalised world where almost everything gets done online, personal data is being violated daily. Most internet users are ignorant or nonchalant about this violation, even though the potential impact could be devastating.

One notable case of a data breach in the past is the Facebook-Cambridge Analytica data scandal in early 2018 where millions of Facebook users’ data was harvested without consent by Cambridge Analytica for political purposes. This sparked rage among its users and #DeleteFacebook trended on Twitter for weeks.

A fresh case of a data breach is on the widely used short video app Tik-Tok, where details of its users are supposedly hacked by hackers. It has since been declared by experts as unsafe due to the vulnerability of the app to hackers.

The effect of a data breach can cause a devastating effect on brands. According to Smith, Gambrell & Russell (SGR) blog, “the effect of a data breach goes far beyond the concrete costs and resources in dealing with the breach” as commonly stipulated. Depending on the severity, the effect of a data breach on brands can go from the mild to the extreme. Even a small business can be severely impacted. Lets look at some of the effects of a data breach on brands.

• Unsolicited Public/Media Attention

It’s a blessing when your brand trends online for a good reason as it has a positive effect on the sales of your products or services. However, cases like this rarely happen because goodwill doesn’t spread like bad news. The public will gladly share bad news eagerly and can bring you much unwanted attention.

• Loss of Customers’ Loyalty

Losing customers’ trust is a big loss to any business and can be a direct result of a data breach. Customers may eventually be lost to competitors who offer them a perceived higher level of security than you can.  But this won’t be the reason that they tell you if you ask why they are leaving.

• Decline in Company’s Value

No business can survive without its customers. With every customer lost due to a data breach, the value of the company reduces automatically. Studies reveal that 29% of businesses that face a data breach end up losing revenue, with 30% of these businesses said to have experienced a loss of 20% or more. This can also result in the withdrawal of stakeholders and shareholders from the company.

• Litigation Against Brands

This is the height of it all. Aggrieved customers whose data got leaked and had incurred damages as a result, can take legal action against the said business. In most cases, such customers come out victorious no matter how long the judicial process takes. The claim from a customer can have a devastating effect on the company’s finances which may lead to its bankruptcy.

In a research conducted by IBM and the Ponemon Institute in their ‘2018 Cost of Data Breach Study,’ it is revealed that data breaches not only impact global brands but also impact mid and small size organizations likewise. ‘A 2019 Data Breach Investigation Report’ by Verizon further reveals that small business accounts for the highest data breach cases with 43% while public sector entities and healthcare organizations are on 15% each.

Another study reveals that small businesses are highly attacked are because of their vulnerability. They have a mindset that they can’t be a target but the report claimed 60% of hacks are made on small businesses. One reason for this attack is to steal their intellectual property which makes them lose their competitiveness when hackers decide to sell the information to their rivals.

How can you mitigates the effect of Data Breach

It is best to avoid a data breach all together, however it is likely to occur at some point or the other. You can cushion the effect by doing any of the following:

• Ensure that you have the best-in-class cybersecurity protection against known and unknown threats.  Free software will never be sufficient.  Spend a little to save a lot.
• Ensure that all company and client data is encrypted.
• Train all staff regularly on the threats prevalent in the market and make sure they remain vigilant
• Have multi factor authentication on all systems

A cyberattack and consequent data breach can destroy a small business but with the right mindset and protection, you can limit your risk and ensure your survival.

Talk to us about our range of cybersecurity tools to help every business prevent cyberattacks.