It’s abundantly clear that a data breach involving your business will cost a lot, but how much will it really cost? Often, many aspects involving the financial loss during a data breach are overlooked and longer lasting than one might imagine.
Customer Notification
Each state has different regulations when it comes to the time period within which a firm must notify its affected customers of a data breach, but regardless of the scope of the applicable regulation, the affected firm is required to notify its customers. These necessary notification services do not come cheap as usually quick deployment is required to a large number of people.
Productivity Loss
When a company has a data breach, business does not go on as usual. Employees are often diverted from their usual projects by the data breach to help secure the company again as well as do their best to discover the extent of the compromised data. This means that usual projects will take longer than they normally do, and there are other similar costs to the lost productivity within the organization.
Insurance Premium Increase
Companies these days are gravitating towards having cyber insurance policies. If the eligible claims criteria are met for the insurance company to have to pay on that policy, which is very hard to do (more on that here), it is likely that the premiums on that policy and other policies will increase dramatically upon annual renewal.
Reputational Damage
The most damaging cost associated with a data breach is the reputational damage the company will experience after falling victim to a data breach. The financial effects of the reputational damage are not seen immediately, but over time the company will likely notice a decline in revenue because customers will have a lack of trust in the company and therefore they will likely not do business with them. This cost of a data breach may never be recovered as a data breach may do permanent damage to a company’s reputation.
Overall, the cost of a data breach is greater than one might expect. The financial effects of the data breach can last for much longer than recovering from the breach itself, and unfortunately, there isn’t much that can be done about those costs. All that the company can do is take precautionary steps before a breach and have a plan in place to minimize the cost of the breach if it were to have one.
LibertyID is the leader in identity theft restoration, having restored the identities of tens of thousands of individuals without fail. If you retain personal information on your customers, now it is the time to get data breach planning and a response program in place with our LibertyID for Small Business data breach preparation program. With LibertyID Enterprise you can now add value to existing products, services, or relationships by covering your customers, employees, or members with LibertyID’s fully managed identity theft restoration service—at a fraction of our retail price—with no enrollment and no file sharing. We have no direct communication with your group members–until they need us.
Call us now for a no obligation proposal at 844-411-LIBERTY (844-411-5423).