The 2015 Cost of Data Breach Study by the Ponemon Institute and IBM reveals that the average total cost of a data breach is of $3.79 million. With the number of data breaches increasing at an alarming rate, it is important to truly understand the scope of their impact on organizations. That being said, let’s delve deeper into some of the reasons that explain why data breaches are so costly to organizations, while also examining other serious consequences that go beyond monetary considerations.
To begin, once a breach has been detected, managing the incident, conducting analyses to determine the extent of the intrusion and damages, identifying the weaknesses that allowed the breach to happen and fixing those weaknesses is a lengthy, unpleasant, and costly process that requires the assistance of industry professionals. In addition to these costs, the inevitable downtime and disruption of operations must be factored in. Moreover, if the breach led to the loss of intellectual property, the organization’s crown jewels, the business will suffer from loss of long-term competitiveness, clients, and partnerships.
Data breaches also expose the organization to breaches of contracts and lawsuits in cases of clients’ or partners’ data. In the United States and Canada, class action lawsuits for cases of data security privacy breaches have been steadily increasing. Invasion of privacy, negligence, and breach of contract are all grounds on which plaintiffs have had success in class action lawsuits related to data breaches. These cases ended up costing millions to the guilty organizations, on top of the negative publicity generated and the damage to client and partner perception it entails.
In closing, data breaches have seriously damaging consequences for organizations. With the number of breaches on the rise, it is paramount that executives are made aware of these harmful impacts so that they can proactively identify their vulnerabilities and act upon them, before someone else does. How prepared are you to face potential data breaches and attacks?