The Latest / Data Security News
March 26, 2019
The cost of a data breach is much bigger than just the data stolen or leaked in the initial aftermath. The effects can go on for years after and cost companies in a number of ways, both financially and reputationally. A study by the University of Warwick has highlighted some of those costs.
The study looked at the cost of a data breach that some of the biggest U.S firms deal with. It looked at 41 high-earning public firms between 2004 and 2016. The report describes how firms can lose a competitive edge in the aftermath of a corporate cyber security incident. It can harm their reputation and result in the company spending time and money in investing in PR and cyber security solutions.
That’s a big opportunity cost. Operations on regular business are drained while the issue is dealt with. And those issues can last for a long time if litigation and government sanctions come in the aftermath of an incident.
These are all well known costs of a data breach, but the report highlighted one increased cost that is not immediately obvious. It found in its study that it was common for firms’ expenditure to increase on CEO salaries in the aftermath of a breach. Firms spend money on new leadership that can help with structural re-organization and help preserve the perception and reputation of the organization.
One of the authors of the study, Dr. Daniele Bianchi said:
“the average response is to invest more in the management to address possible structural flaws, as well as maintaining the integrity of the firm in response to the reputational damage it has suffered.”
The cost of a data breach is massive. It can plague companies for a very long time in the following months and years. One thing all those who are affected by breaches do, is set about improving their cyber security operations. That’s all well and good in the aftermath. But why wait till an attack has happened to invest in a change alongside all the other difficulties that come with a data breach.
If organizations are proactive and invest today, they can greatly improve their chances of avoiding all the other costs that come with a data breach. In 2019, the reality is, good cyber security is the platform on which good business operations take place.
Act now, build a security ecosystem today to stop the extra hidden costs that come with data breaches in today’s corporate world.