In this digital age, a security breach is one of the biggest threats for any business. The implications can be minor and quickly remedied, or they can be large enough to sink a brand. In most cases, the consequences are somewhere in between, and in all cases, prevention is far superior to the cure.
In 2019, IBM released a report stating that the average cost of a data breach was USD 3.92 million. In certain industries, this cost was higher – such as healthcare with the highest cost of USD 6.45 million.
Unfortunately, financial losses are just one of many after-effects of a security breach. Here are a few important ways a breach could affect your agency.
Damage to the brand name
One of the most difficult outcomes of a security breach is that of damage to the brand name. The last thing any company wants is for their brand to forever be associated with security issues, as this can have far-reaching effects on their future success.
Many breaches can be managed with clear communication and a swift response, whereas a major breach may require a costly rebranding to help improve the market’s perception of a business.
Loss of IP
For some companies, one of the biggest issues can be the potential loss of intellectual property. This could be anything from designs, to strategies, research, spoilers (for books, films, games etc), secret recipes, or other documents and files.
Additionally, it can be extremely difficult to tell if a loss of IP has actually occurred, as hackers do not need to physically take files away to steal anything.
These losses can devalue a brand, lose customers, threaten future work, and more. Depending on the breach, agencies will need to carefully assess what has been lost, repair relationships with clients and contacts, and watch the market for signs of that IP popping up in other areas.
Insurance premium increases
Smart companies will have insurance to cover themselves in the case of a data breach. This can minimise the financial impact of losses, and is a must-have for modern-day companies.
However, one of the lesser-known after-effects of a breach is that insurance companies may increase their premiums. Much like insuring a car and making a claim after a crash, these incidents can drive insurance agencies to up their premiums to mitigate their own risks.
New Zealand is in the final stages of replacing the outdated Privacy Act of 1993.
The bill has passed its second reading in parliament and is currently with the Committee of whole House before its third reading, which is the final step before becoming law.
The reforms would require agencies to inform anyone affected by a privacy breach of the issue if the breach poses any risk of harm. The agency would also have to inform the Commissioner. Among other changes, the Act would essentially tighten security around data breaches, and give consumers greater protections and trust in their dealings with companies.
As a company, this means it would be illegal to hide security breaches.
Naturally, avoiding all of these consequences of security breaches is considerably preferable to dealing with them. Any company not already taking security as seriously as possible must make changes as soon as possible to avoid the fallout of a breach.
CANDA is a company of cyber security specialists committed to helping organisations manage their cyber security measures. If you are unsure about your current measures or are looking to make improvements, get in touch today and avoid the messy consequences of a data breach down the road.