As the world becomes increasingly dependent on technology, data breaches are a constant threat. In fact, the ID Theft Resource Center estimates that there have been more than a billion records exposed since January 2005.
Each breach is not only problematic but also expensive. In 2013, 500 million accounts on Yahoo were hacked. This data breach cost the company $350 million and put an end to a company that had once been valued at $125 billion. In fact, they were sold to Verizon for $5 billion, a huge decrease in value.
Although Yahoo was a large business when they were hacked, data breaches are a danger to both large and small businesses. In fact, a 2018 report released by Verizon indicated that small businesses make up 58% of data breaches. Cybercriminals target vulnerable systems regardless of the business size.
Understanding the Cost
Small businesses can face tens of thousands of dollars when they have a cyber attack. They also face a loss of business after the breach. This means that a small business without insurance can easily go bankrupt and may be the reason why 60% of small businesses shut down within six months of a data breach.
The cost of a data breach is going to vary depending on the organization but is always expensive. Costs include industry fines, forensic investigations, card replacement costs and more. For companies without insurance, the cost is approximately $225 for each compromised record in the United States.
Healthcare businesses face even higher costs with data breaches. Those records average $380 which is the highest of any industry. However, financial services are close behind at $336 per record and life science at $274 per record. For businesses that want to understand breach costs, IBM actually has a data breach calculator to use.
A breach doesn’t just lead to high fines. There are additional associated costs for businesses including the following:
- Disrupted Productivity- it may take up to two months of lost productivity for companies to detect and resolve a breach.
- Lost Customers- customers are likely to stay away from compromised businesses.
- Reputation Damage- the brand and reputation of a company will suffer with breaches, meaning higher costs for PR firms to mend relations.
Preventing Data Breaches
All businesses should take precautions to prevent data breaches with the following tips:
- Secure computers. Require strong passwords on any computers and avoid storing personal information unless necessary.
- Keep software up-to-date. use firewalls, anti-virus and anti-spyware software such as McAfee and keep them updated.
- Educate and train employees. Make sure employees know how to protect data.
- Purchase data breach insurance. This coverage will help to restore your business if a victim of a cyber attack.
When it comes to data breaches, all businesses are at risk. Regardless of size and precautions, there will always be some risk of the company being compromised. Take the necessary precautions to reduce the chances of being attacked as well as being able to survive a data breach. These steps will keep businesses and their customers safe.