The Damaging Consequences of a Data Breach
A data breach occurs when the data for which your company/organisation is responsible suffers a security incident resulting in unauthorised access to confidential information.
The repercussions of a data breach are deeply impactful for companies and their customers. Despite organisations going to great lengths to reduce the chances of a data breach through stringent data security layers, attackers are always attempting to circumvent these methods.
There are roughly 320 data breaches reported to the Data Protection Commission (DPC) every day in Ireland.
Discussed below are some of the main damaging consequences for an organisation as a result of a data breach.
Reputational Damage
The last thing organisations want is to be perceived as untrustworthy to customers.
Depending on the size of the organisation and the impact, the news often travels fast regarding a customer data breach. Bad press in the media mixed with bad word of mouth will have an impact on your brand’s reputation and ultimately have an effect on your bottom line.
Any organisation deemed to be careless with customer data will see a negative impact on customer loyalty and its market position.
Financial Loss
Immediate direct financial losses include expenses for investigations, redress schemes, public relation efforts or potential fines.
Indirect losses include loss of revenue due to reputational damage, increased customer churn, increased insurance premiums along with greater need to invest in more effective cybersecurity systems. Lower sales after a data breach often occurs because of customers moving to competitors perceived as more secure.
Companies that suffer a data breach may face hefty fines from regulatory bodies. Penalties as a result of the General Data Protection Regulation (GDPR) in the EU could bring with hefty fines.
Similarly, lawsuits from individuals affected by the data breach could incur massive financial penalties for companies. Lawsuits can result in substantial settlements or judgments against the company.
Disruption
Data breaches often cause serious disruption for organisations. Thorough investigations into what happened and how it happened occur after a data breach. This can involve taking systems offline and out of use to investigate the origins of the breach.
Until investigation answers are verified there will likely be downtime for regular operations before processes return to normal.
Organisations may also need to implement temporary solutions to maintain operations, such as manual processes or alternative systems, which are often less efficient and more prone to errors.
Data Exploitation
Personal data can be used by malicious parties to commit fraud, open unauthorised accounts, or engage in illegal activities. This can cause significant financial and personal distress to victims (including both customers and employees).
Privacy violations including leaked sensitive information, such as health records or personal communications being exposed can have a detrimental impact on individuals’ personal and professional lives.
Employee Morale
In the case of employee data being exposed employees may feel insecure about their personal data and job security, leading to decreased morale and productivity.
Higher stress and uncertainty levels caused by data breaches can drive valuable employees to seek employment with companies perceived as having better security practices. Ultimately, this leads to loss of talent. It also brings additional costs for recruitment and cybersecurity training.
The consequences of a data breach can be severe and long-lasting, affecting both individuals and businesses. It is crucial for organisations to be vigilant and prepared for a data breach.
Are you preparing to alter your data management strategy over the next few months? If so, contact us today on +353 1 8041298, or click on the link below to be brought to our contact form.
