When thinking about the damage cyber breaches can cause, it is common for organisations to consider the immediate financial ramifications. These include expenses related to incident investigation and remediation as well as operational disruption. However, many organisations remain unaware of the less obvious costs associated with cyber-attacks, which are often intangible, difficult to measure and under-reported.
In fact, according to a report from Deloitte, it is often the case that factors hiding ‘beneath the surface’ account for more than 90 per cent of the total cost of data breaches. Many of these costs last for years, and the effects may not even be noticed or fully understood for a long time.
Unexpected Cyber Attack Costs
In this article, we take a look at six hidden costs of cyber-attack that your business might not have thought about. It is important to be aware of these costs as they can have a hugely negative effect on your organisation if it suffers a breach.
A cyber-attack can devalue the name of your brand. If customers (and prospective customers) feel that they cannot trust you to keep their data secure, this can lead to customer attrition and difficulty winning new business.
When credit score giant Equifax suffered a cyber breach in 2017, it caused significant damage to the company’s reputation. On the YouGov BrandIndex, the company’s buzz score fell from 0 to -33 in just ten days – one of the largest falls in such a short space of time.
A number of factors influenced this drop. Firstly, the fact that when the company announced the breach, it was actually several months after the original cyber incident took place. Additionally, the scale of the attack was damning: approximately 145.5 million users had their data stolen by cybercriminals.
Loss of intellectual property
It is not just personal and financial information that is stolen during cyber breaches. Increasingly, cyber-criminals are targeting intellectual property, ranging from trade secrets to business strategies and investment plans.
Losing secrets or strategies can take away the competitive edge from a business. Initially, while that might not seem hugely important it can have serious long-term consequences.
Even non-businesses are targeted with these sorts of attacks. Universities, for instance, have seen a growing number of cyber-attacks attempt to acquire valuable research conducted by staff and students.
Increased borrowing costs
It is also the case that organisations that suffer damaging cyber breaches are perceived as higher-risk when it comes to financial lending. Cyber incidents can lead to a significant drop in a business’ credit rating. This can lead to much higher costs when raising or renegotiating the debt.
It is also worth pointing out that cyber-attacks may deter potential investors such as venture capitalists, which limits the options available to breached organisations looking to raise funds.[content_band bg_color=”#E8F6D2″ border=”all”] [container]By the way, did you know that T-shirts are also a great way to introduce yourself and your business? Printsome’s T-shirts are perfect for souvenirs, merchandise and staff uniforms, among many other possibilities. Visit our website to find out what we can do for you.[/container] [/content_band]
Higher insurance premiums
As well as increased borrowing costs, companies should also be worried about facing higher insurance premiums, as a breach will mean that an organisation is considered a greater risk.
It should also be highlighted that there is no guarantee that a business with cyber insurance will be fully covered in the result of a cyber incident. Insurance policies tend to be written narrowly to cover costs related to the loss of customer data, such as helping a company provide credit checks or cover legal bills. Insurers also insist that organisations maintain an appropriate level of security control and conduct regular security assessments such as penetration testing.
“With threats continuing to grow in both volume and sophistication, understanding how an attacker might breach your business’ defences and the appropriate action needed to address the risk is an important part of effective cybersecurity.” Glossary of Penetration Testing from Redscan
Unforeseen compliance issues
Organisations’ compliance failings can often be exposed by cyber-attacks. But it is worth pointing out that many businesses focus too much on financial penalties rather than the other sanctions issued by regulators. For example, the Information Commissioner’s Office has the power to audit businesses and even carry out criminal prosecutions in order to forcibly change the conduct and behaviour of an organisation.
For organisations that process payment card information, failure to comply with the PCI DSS could result, in addition to a fine, higher transactions fees. In extreme cases, a bank might decide to withdraw its services to a company that is no longer able to accept payments.
Text: Annie Button
Damage to SEO
Cyber attacks can have a hugely negative effect on an organisation’s SEO. You may have spent a very significant amount of time and money optimising your site, and a cyber-attack can result in downtime, Google warnings against your site, and defaced content – all of which can negatively affect ranking positions and bottom line.
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