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Here’s a not-so-fun-fact for you: there’s approximately a 60 percent chance that your organization will suffer a data breach in the span of three years unless you implement the necessary cybersecurity measures to prevent it.

If you fail to protect your organization against the host of cyber-attacks that target your data, you risk suffering significant business disruption as a result. The total cost of this disruption may be impossible to recover from because data loss affects all aspects of an organization’s operations. What’s more, it often has a lingering negative impact years after it has occurred.

To explain where the true cost of data loss comes from, let’s break down the financial impact of a data breach into three major categories. These categories concern all organizations that store sensitive data, whether it’s customer information or employee records.

Business Interruption

When an organization detects a data breach, its only goal is to prevent further loss of data by shutting everything down as quickly as possible and resuming operating only when the source of the data breach has been identified and eliminated.

This immediate interruption of revenue streams is responsible for nearly 40 percent of the average total cost of a data breach. If the interruption lasts a long time, as is often the case with ransomware attacks, it may, however, end up being significantly more costly.

Sometimes, organizations can identify the cause of the data breach on their own (a stolen laptop or a weak password), but more sophisticated data breaches tend to require an in-depth investigation by cybersecurity experts, as well as a comprehensive review of all recent network activity.

Until the investigation is concluded, employees can’t do their jobs, and productivity slows down to a crawl. That’s especially bad news for organizations that are contractually obliged to deliver products or services on time.

Damaged Reputation

Would you tell a secret to someone who is known for not being able to keep one? Of course not. Likewise, organizations that fail to adequately protect sensitive information against cybercriminals are seen as less trustworthy in the eyes of customers and business partners alike.

To put it in perspective, approximately 70 percent of consumers wouldn’t hesitate to stop doing business with a breached organization. If their data is stolen, the majority (93 percent) of consumers would take or consider taking legal action against the compromised organization.

Because organizations are now required to notify their customers and the supervisory authority of a data breach within a specified timeframe, they can’t escape public scrutiny and long-term reputation damage regardless of the true scale of the data breach. Organizations with a bad reputation have to work much harder to replace lost customers and find new business partners, which only makes it that much more difficult to get back on their feet.


Organizations that suffer a data breach can be hit with fines that may, in some cases, greatly exceed the cost of lost business and damaged reputation. The GDPR (General Data Protection Regulation) sets a maximum fine of €20 million or 4 percent of annual global turnover for the failure to adequately protect sensitive data and other infringements. Remember, though, that regulations may only apply to certain types of businesses, so it’s worth investigating. The FTC is a good place to start.

In addition to sweeping data protection and privacy regulations, certain industries have their own guidelines for protecting sensitive data. For example, the Health Insurance Portability and Accountability Act of 1996 (HIPAA) sets the standard for sensitive patient data protection and imposes penalties ranging from $100 to $50,000 per record for violating this standard.

On top of regulatory fines, organizations may have to pay a hefty ransom to regain access to their data, and cybercriminals don’t hesitate to ask for a large sum of money. The average ransom amount paid last year was $41,198, and statistics make it clear that cybercriminals are only getting greedier, highlighting the importance of implementing strong cybersecurity measures.

Not Just the “Big Guys”

The cost of data loss goes far beyond the immediate business interruption. The ramifications of data breaches may extend for years afterward, making it difficult for organizations to meet their financial needs and remain profitable. Small and medium-sized businesses are especially vulnerable because they don’t have the financial cushion that would allow them to survive the combined impact of lost business, damaged reputation, and regulatory fines. That’s why they must take data protection extremely seriously and strengthen their cybersecurity defenses as much as possible.

What You Can Do

Run through our Do It Yourself Health Check to look for small openings that cyberattackers might sneak into. If you need any help looking over your systems, or if you have any concerns about your current cybersecurity plan, just contact us. We can walk you through the steps to make and implement a comprehensive plan that can keep your company’s data, money, and reputation safe.