The Damaging Side-Effects of a Data Breach
Almost every other day, there’s a news story about data breaches. Cyber attacks and data breaches are becoming increasingly common as intelligent hackers are finding new ways of infiltrating companies’ networks.
With the number of data breaches increasing every year, more and more companies are adopting security measures to keep data secure and minimize such attacks. However, loopholes still exist which makes sensitive data vulnerable to cyber theft. A data breach not only results in loss of sensitive data and compliance issues but also has more lasting effects for the businesses. More than the loss of data and resources, these cyberattacks tarnish the reputation of a company and can even hurt its value in the market. Depending on the type of data breach, these cyberattacks negatively impact the company’s competitive edge in the market, as well as hurt the public sentiments.
Negative Impacts of Data Beaches for Businesses
In addition to the financial repercussions, these breaches come with a variety of negative consequences for businesses. Here are some catastrophic effects of a data breach for a company.
The biggest asset of any organization is its good reputation. Companies devote a lot of time, resources, and efforts to build and maintain the integrity of their brand. However, years of hard work and reputation can get a severe setback by a single case of a cyber breach. It is found that post cybersecurity breach, most businesses have to deal with rebuilding their tarnished image and restore their damaged brand value. The cost of reputational damage remains hidden but it has a long-term negative impact on the performance of the company.
Recovering from a data breach takes time because the systems get compromised. The moment companies detect infiltration, the management gives instructions to stop operations until a solution is found and security is restored. This results in impeding the business operations and the cost of this lost business results in reducing the revenue. The IT professionals have to find the source of the data breach and restore the system which takes time. In case the extent of damage is wide and far-reaching, it takes longer to remove the threat. However, if the business network is down for a longer time, it translates into a loss of precious business time. When business activities are shut down, customers can no longer avail their products or services. And when this happens, clients or business partners switch to the competitors.
Decreased Competitive Ability
There are various reasons for cyber attacks. Usually, cybercriminals target companies to get access to their proprietary information such as customer data, pricing strategies, and trade secrets which they can sell to the company’s competitors. By exposing the sensitive data to the general public or industry rivals, the hackers intend to damage the competitiveness of the business. Such data breaches result in reducing the customers’ trust in the company and negatively affect customer loyalty. If the company fails to restore the trust of its customers after a cyber data breach, its customers are likely to move to their competitors.