Data breaches equal angry consumers, worried companies, and big headlines. Month after month it seems that there’s been another high profile company hacked. From government agencies to retailers to technology companies, no one seems safe. The consequences of a breach that allows hackers access to personally identifiable information are extreme. Here’s a short list of some of the most severe:
The cost of cleaning up
From hiring a third party company to conduct a forensic examination of the breach and its surrounding circumstances to overhauling a company’s cyber security practices, cleaning up is costly. Add to that the necessity of notifying each and every individual whose information may have been affected, and the costs go up even more.
Public relations and communication
A cyber security breach can be absolutely devastating for a company’s reputation. It damages not only the trust of consumers, but of its investors and suppliers as well. Public relations is a key component to recovering after a data breach, and to be done right it cannot be done cheaply. Losing even more customers than necessary and losing revenue is to be avoided if at all possible.
Bring on the lawsuits. As data breaches become more common, and the legal community more accustomed to dealing with them, lawsuits are also becoming more common. Consumers may sue, banks may sue—the list goes on.
And it’s not a bad idea to have the legal team on hand to go over regulatory issues, as well, because state and federal authorities frequently get involved if the breach is high profile enough. The state attorney general or the Federal Trade Commission may be knocking at the door to levy fines and penalties against the company.
Dropping stock values
While not all companies experience a hit in terms of stock price, many other do. Lost revenue (or investors’ fear of lost revenue), the threat of waning consumer loyalty, and concerns about future security can all have an impact on investors. In highly competitive industries, any negative publicity can spell bit trouble for a company, let alone something as damaging as failing to maintain their cyber security.
Whenever possible, it’s important to prevent attacks on your company’s data. Of course, not all breaches can be prevented, but the vast majority could have been. Hackers are generally interested in low hanging fruit, and a company that is employing all available cyber security protections just isn’t appealing to them.