Most businesses now store more of their data online, and this increases their vulnerability to cyberattacks. The impact of a cyber-incident on a business can be massive, depending on the degree of the attack. More so, dealing with cybercriminals increases the expenses of the company, which may ultimately trickle down to clients as they may have to pay higher prices for the sustenance of the company.
According to the Center for Strategic and International Studies and computer security company McAfee, companies lost almost $1 trillion to cybercrime in 2020. Very few businesses are safe. Just as big companies with online presence are being heavily targeted, small and mid-sized companies are also not spared.
Here is a look at the things that you may not know about the business impact of a cyber-incident.
1. Disruption of Business Operations
It is common knowledge that there are actual financial damages that companies incur when there is a cyberattack. In addition to this, there can also be a loss in revenue as a result of a major interruption to the company’s operation.
There are many ways that are employed by cybercriminals to disrupt the normal activities of a business. Sometimes, they do this by blocking access to your website by installing malicious code on your server, or by infecting endpoints with malware that erases valuable data, all to disrupt the operations of the company.
2. Business Practices Are Altered
The impact of cybercrime on businesses is not limited to the finances; business practices are also altered in many ways. After a cyber-incident, companies have to think about more effective ways to collect and store data to ensure that they are no longer vulnerable to future attacks. One of the measures that businesses have started taking is that they have stopped storing personal and financial information such as birth dates, SSN, and credit card numbers.
Some businesses have had to close down their online stores because they are not sure they can adequately protect against cyberattacks. Customers want to be sure that their data is safe with businesses, and that the company can handle security issues efficiently. Clients naturally feel safer with businesses that are transparent about what protective measures they have put in place to ensure the safety of their data.
3. Reduced Institutional Trust
There is a high chance that the brand equity of a business that falls victim to a large cyberattack will be significantly tarnished. Clients of such a business may lose confidence in the company’s ability to protect their sensitive information. They may feel that if the IT infrastructure of the company was broken at least once before, then it can happen again.
In 2013, the data of Retail Giant Target (TGT) was breached. This attack involved the credit card information of over 40 million customers, and this security breach cost the company $18.5 million to settle. But the impact on the company was not limited to their finances; they suffered reputational damage that persisted long after the breach.
Security researchers Comparitech did a study of 40 data breaches across 34 organizations that are listed on the NYSE. It was found that in addition to institutional trust being reduced, publicly traded companies are highly likely to experience a short-term drop in market value following a cyberattack.
4. Stolen Intellectual Property
Some of the most valuable assets of a business are its technologies, product designs, and go-to-market strategies. In 2015, Intellectual Property Advisory, Ocean Tomo, suggested that the intangible assets of S&P 500 companies account for 87% of their value.
Most businesses store their intellectual property in the cloud where it is vulnerable to attacks. Within the past 10 years, almost 30 percent of U.S. companies have reported that their intellectual property was stolen by a Chinese counterpart.
Schedule A Free Consultation to Discuss Your Cyber Security Plan
There are many ways to prevent a cyberattack and minimize its impact on your business. When your cybersecurity plan is weak, you stand the chance of being a victim of an attack. Contact us today so we can help you form an excellent cybersecurity plan that will turn out to be your savior in case of an attack.