What Are the True Risks of a Data Breach?

What Are the True Risks of a Data Breach?

When setting out on a business venture, you will be told countless times about the importance of solid, reliable cybersecurity. With the world of cybercrime constantly evolving – and technology benefiting cybercrime evolving along with it – every company is vulnerable to data breaches that can set them back and even put them out of business. But what you’re not often told is how data breaches can do this. What are the true risks of a data breach, and why should your business do everything in its power to protect itself?

The Question of User Data

With big data being such a critical factor in running a successful business, nearly 75% of companies are collecting personal data to better understand the market, improve their services, and personalise their experiences. With this in mind, the first thing to note is not what might happen to that data when it is breached, but how consumers will react.

Because of a lack of trust, many consumers have decided to delete digital footprint and stop their personal information from going to businesses in the first place. Because of their more direct understanding of the cybersecurity scene and the question of user data, if businesses have that personal information and lose it, then consumers are not going to be happy.

According to a recent survey, over 80% of consumers say that they would entirely stop engaging with a brand after a data breach. Even if you have put in appropriate measures to secure your system, this loss of trust can be enough to decrease your profitability and ultimately ruin your reputation as a trustworthy, user-oriented business. Apart from the direct cost of fighting and patching a data breach, it is this loss in trust that can significantly impact a business’s finances – and considering the prime target of data breaches is small-to-medium businesses, this is why so many breached companies cannot come back from the financial loss.

Downtime and Legal Implications

The damage to your business’s reputation is also not helped if you haven’t taken the necessary steps to secure your data. In line with GDPR, organisations that have been found to be in violation of lawful cybersecurity practices can be fined up to 4% of annual revenue, with one of the most significant fines happening to Meta in 2023 – which was fined $1.3 billion for violating laws pertaining to data transfers.

If data security has been compromised, individuals can also seek legal action for compensation, which is not only another direct case of financial loss, but another log in the fire of your company’s already burning reputation. Add to this the downtime where your business is not making any money – either due to reparations or data-related investigations, which can average around 277 days – and it’s clear how much of a risk even a small-scale data breach can be.

Conclusion

In order to avoid all of this, then, it’s crucial that you stay in line with data regulations, and go above and beyond to install the best cybersecurity software. As well as this, it can also be a good strategy to demonstrate your cybersecurity measures to customers, along with your commitment to keeping up with new laws and regulations surrounding cybersecurity. If you are open and transparent about what data you’re taking, why you’re taking the data, and what you are doing to protect it, then you are sowing the seeds of trust that might help you if anything goes wrong down the line.

As we mentioned before, cybercrime and hacking tools in the new tech era are evolving to keep up with new vulnerabilities, and no matter how good your security measures are, you cannot say that a vulnerability will never show up. But as long as you are doing everything in your power – and your consumers know that you are doing so – you can preemptively limit the reputational damage of a breach and work to build a strong foundation of trust.