Is it worth it? The Financial and Emotional Impact of Data Breaches

Category: News
Published: 24th June 2024

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The consequences of a data breach cannot be overstated. With the average cost of a data breach estimated to be £3.5 million it is enough to end long standing and profitable businesses.

It is vital that organisations are aware of the threat level and consequences of not having sufficient cybersecurity protection in place. These data breaches arise from a multitude of sources including innocent errors, malicious hacking, or insider threats. Beyond just the loss of data, they unleash a cascade of consequences, from crippling financial losses to profound impacts on the emotional and mental well-being of those involved.

The impact of a breach

The aftermath of a data breach is multifaceted, entailing reputational damage, financial setbacks, and disruptions to business operations. The time taken to recover from a breach varies widely from weeks to months. Either way, the disruption is immense. There can be a lack of access to critical business tools such as email and essential IT systems, which ultimately jeopardises profitability.

The financial toll of a breach extends far beyond the initial incident. Recovering compromised data and mitigating for disruptions to core operations entails substantial costs. Additionally, the exhaustive efforts of IT and recovery teams, working tirelessly to restore normal service, incur further expense. These unforeseen financial burdens can significantly damage a company’s bottom line, even with insurance coverage in place.

Beyond the balance sheets and profit margins, data breaches exact a toll on the emotional well-being of employees. Extended work hours, altered routines, and the stress of navigating operational constraints can take a profound toll on mental health. The psychological strain of feeling vulnerable and uncertain in the wake of a breach can linger long after the immediate crisis has passed.

Engaging with your board

Given the serious consequences outlined, securing investment for robust cybersecurity measures is crucial. To facilitate this, we’ve compiled a few questions to put to your board to get them thinking about the ramifications for your business:

Has the board conducted a comprehensive risk assessment to understand the types of data  held and the potential impact of a breach on each category?

Compared to the potential financial and reputational damage outlined, what is the estimated cost of implementing stronger cybersecurity measures?

Where does cybersecurity currently stand on the company’s list of priorities?

Beyond the cost of a breach, what are the potential long-term benefits of investing in robust cybersecurity measures? (e.g. building customer trust, fostering a secure work environment)

Real-world examples

To further underscore the necessity of robust cyber security, consider these recent examples:

  1. IT service provider breach impacted house moves
    A cyberattack on a legal IT provider, CTS, disrupted house purchases in the UK for nearly a month in late 2023. The incident impacted around 80 firms and caused delays for many buyers. The National Cyber Security Centre (NCSC) warned that law firms are particularly attractive targets for attackers due to the sensitive data they handle. This example shows the importance of the security of your suppliers.
  2. The role of cyber security in modern warfare
    A cyberattack on Viasat’s KA-SAT satellite network coincided with Russia’s invasion of Ukraine, disrupting internet access for tens of thousands of civilians across Europe. Again, the impact on the supply chain was huge with the customers of many resellers across Europe affected and each of those organisations working around the clock to restore service. Again, this shows the impact of not just your security, but the security of your entire supply chain and the need to prepare for any eventuality.
  3. Rebuilding infrastructure months after an attack
    A cyberattack in October 2023 severely disrupted the British Library’s operations. Attackers encrypted or destroyed data, including user information, and the library is still recovering. While core collections are secure, restoring access to services has been slow due to damaged infrastructure. The library is rebuilding its technology platform and acknowledges its legacy systems contributed to the attack’s severity. They are aiming for a more secure and modern infrastructure from this rebuild.

These examples demonstrate not just the need for protecting your own data but also the importance of securing the entire digital ecosystem. As we can see, when it comes to cybersecurity, prevention is indeed better than cure. Don’t wait for a breach to be your wake-up call, invest in cyber security today to build a secure future for your organisation.