As businesses generate and share increasingly large amounts of digital data, the potential for cyberattacks increases in tandem. The more information that’s out there, the wider the attack surface becomes. Cybersecurity technology is becoming more sophisticated—but so are hackers’ methods.
So, what is the cost of cybercrime to your business? Is it something you need to lose sleep over?
The answer is yes. Cyberattacks come at a huge price, both financial and reputational, and they can even put you out of business.
In this post, we’ll examine exactly how cyberattacks affect organizations, the true cost of cybercrime, and how you can avoid it.
Why is cybercrime a threat to businesses?
Cybercrime, data breaches and unsecure documents can pose a serious threat to businesses. Hackers who infiltrate your systems might steal money from the company. They might install ransomware, preventing you from accessing your own files and threatening to delete them unless you pay a ransom.
Cybercriminals could steal your intellectual property or financial records and make these available to your rivals. If confidential data about customers or employees is breached, your reputation will be damaged. You could face a hefty fine, plus the cost of compensating those affected.
Reputational damage leads to lost custom and a drop in revenue. On top of that, you’ll have to pay for system repairs or data recovery and invest in additional security measures. Your business insurance premiums may skyrocket after an attack.
But how much does a cyberattack cost an organization in dollars? The average cost of a data breach has risen to $4.45 million, and the estimated cost of cybercrime worldwide is expected to reach $13.82 trillion in 2028.
While you may think large organizations are most at risk from cybercrime, smaller businesses are often more vulnerable too as they may not have invested in robust protection, making them an easy target for hackers. The cost of cybercrime to businesses
Let’s take a closer look at the effects of cybercrime.
Malware and network outages reduce employee productivity
If malware infiltrates your system or a network outage is caused, it will massively disrupt your operations. Should employees be unable to use essential applications, access important documents, or communicate with customers, their productivity will be severely impacted.
In the worst-case scenario, you’ll be paying staff to sit around while waiting for systems to be restored—you might even have to close the business briefly. Meanwhile, you’re missing out on potential sales.
Free-to-use image sourced from Unsplash
Cyberattacks can damage a company’s reputation
As we mentioned, cybercriminals often gain access to sensitive customer data—including names, addresses, and payment card details—and use it for nefarious purposes. Your clients could become understandably upset if their data is compromised, especially if it leads to financial losses or identity theft.
Even if personal data isn’t affected, a breach will change existing and potential customers’ opinions of your brand. If you can’t keep your business safe, why should they trust you with their money or information? You may also have to hike your prices to recoup costs.
Lax cybersecurity may lead to employee turnover
Employee records and payment information are also vulnerable. In the event of a data breach, HR records can be compromised, exposing sensitive employee data. Such breaches may lead to a loss of trust among current employees, potentially causing them to leave. Additionally, potential applicants might be deterred from applying.
It’s important to ensure the security of systems, like HR software, and maintain staff confidence in their privacy. It’s also crucial to train staff in cybersecurity so that they become confident in using your systems safely—for everyone’s peace of mind.
Customer notification costs after data breaches
If the worst does happen and customer data is compromised, you need to send a data breach notification to the affected parties as quickly as possible. Don’t delay or attempt to cover up the breach—many countries (including the European Union and all 50 US states) have strict laws governing customer notification.
Customer notification costs are one of the hidden costs of cybercrime. Addressing each impacted customer demands considerable time and effort, particularly as they often seek detailed information. Additionally, once the breach becomes public, it may damage the company’s reputation.
Substantial fines for data protection law violations
Most countries now have laws and regulations around data protection, such as GDPR and CPRA, and industry-specific standards, such as HIPAA for healthcare and GLBA for financial institutions. These hold organizations accountable for the protection of customer data. Penalties for non-compliance range from civil penalties to criminal prosecution.
In many cases, the fine will depend on the damage caused by a data breach. In 2021, Amazon fell foul of GDPR law and received a €746 million ($877 million) fine from officials in Luxembourg.
Free-to-use image sourced from Pixabay
Possible litigation costs for victims seeking redress
If their personal data has been stolen, customers may take legal action against your company. You could end up facing multiple lawsuits and have to pay attorney fees as well as compensation. And the cost can be eye-watering.
In 2021, T-Mobile faced a class action lawsuit following a data breach that affected around 77 million people. The business was told to pay a total of $350 million to fund claims, legal fees, and costs. The same year, Capital One agreed to pay $190 million to settle a class-action lawsuit over a data breach affecting 100 million people.
How to avoid cybercrime attacks
Here are some tips for preventing or at least lessening the impact of cybercrime.
Secure networks and devices by keeping software up to date
Any internet-connected network or device is at risk of cybercrime, while hackers often exploit vulnerabilities in older software. It’s vital to run the latest versions of systems and software, as the vendors will have installed security updates and patches.
A penetration test can reveal potential vulnerabilities in your system that could put you at risk. You also need to make sure you have adequate firewalls and technology to hide and secure your Wi-Fi networks. A VPN (virtual private network) offers further protection.
Train employees on cybersecurity best practices
Human error often plays a part in cybercrime, so train all your employees to be cyber-safe and to recognize the signs of a potential attack. For example:
- not reusing or sharing passwords;
- not clicking on suspect emails;
- not using unsecured Wi-Fi networks in public places; and
- reporting any unusual activity.
It’s important that training is ongoing to reflect new software or systems and the latest cyber threats. Support teams should know how to help customers stay safe and how to respond to a breach. Let your staff know that security is everyone’s responsibility.
Free-to-use image sourced from Pixabay
Write a cybersecurity policy for your business
To help employees stay safe, create a cybersecurity policy for your business and review it regularly as new threats emerge. This is a set of procedures, rules, and best practices and should cover potential risks, legal requirements, and consequences for non-compliance. Make the policy accessible to all employees and to the public—this demonstrates your commitment to data protection.
You should allocate part of your budget to training, upgrading any systems, and creating a robust cybersecurity policy. The long-term savings will far outweigh the initial cost. You can use expense management software to allocate and track this spending. Expense management software will also help you track and categorize expenses related to a cyber incident, allowing for a clear understanding of the financial impact.
Backup data regularly to recover from cyberattacks or data loss
Your business can’t function without essential data, so make sure it’s backed up regularly and that it can be restored. This means you can recover quickly in the event of an attack, and you’re less likely to be blackmailed with ransomware. Most cloud storage solutions provide automatic backups.
You should identify your essential data for priority backup and consider storing the backups in a separate location—such as tThe cCloud. This not only protects you against cybercrime but against data loss from natural disasters or human error.
Develop a cyber attack response plan
Sadly, the odds of suffering a cyberattack are high— that’s why it’s always best to have a response plan in place. This should clearly outline what you’ll do in the event of a breach, including how to contain it, who to report it to, and how you’ll contact customers and stakeholders.
It’s worth developing a version of the plan for each department and leaving some wriggle room in your budget to cover at least some of the costs if the worst happens.
Protect your business with preventative measures
The cost of cybercrime is high: financial consequences can include stolen money, loss of revenue, fines for breaching regulations, and even lawsuits against your company. It takes time and money to get your business back on track, from recovering data to recovering your reputation.
Taking preventative action is the best way to avoid attacks and minimize damage if they do occur. For example, backup your data, train your employees, and make sure you can remotely lock or wipe company devices if they’re lost or stolen.
Cyber threats are constantly evolving, so make sure you review your security policy regularly, always keep software updated, and be aware of the latest risks.
