The Business Impact of a Breach: What Every Exec Needs to Know Before the Headlines Hit

It's not if, but when. Data breaches happen daily, and the reality is that one might be closer to your organization than you may think. Every executive should be taking the proper steps to prepare and prevent a cyberattack and today we are going to explain why.  

Let's start by outlining the business, financial, legal, and reputational consequences of data breaches. There are a few steps that you can take today that will be your key to success before a crisis unfolds. 

The True Cost of a Breach 

When looking at a data breach we have two kinds of costs, direct and indirect. A few of these might be obvious but a breach can spread to any or all parts of your organization and the wider the breach the more costs there are to think about. 

Direct Costs: 

• Incident response: Hiring external cybersecurity consultants to contain and mitigate the breach. This also includes the cost of purchasing additional security tools to get the breach cleaned up. There are also potential costs in employee overtime directly after the breach. 

• Forensic investigation: Hiring third party digital forensic experts to determine the source and cause of the breach. These teams do in-depth internal and external investigations to track the attack.  

• Regulatory fines and legal fees: Regulatory fines include any penalties for non-compliance with cyber and data regulations. The fees for legal counsel can also take organizations by surprise, as you will need counsel for negotiations and remediation. 

• Customer notification: These are the costs of notifying all affected individuals and providing them with resources. 

Indirect Costs: 

• Downtime and lost productivity: These are costs that accumulate due to disrupted operations and system shutdowns. These can be quite costly, especially if the breach affects systems for days or weeks at a time. 

• Reputational damage: This cost can be difficult to measure; however, it could be the greatest loss. Without customer loyalty and trust, it can be near impossible to truly recover from a breach. 

• Customer attrition: After a breach you are at a greater risk of losing customers to competitors.  

• Long-term share price or valuation impact: Often stock prices plummet post breach for publicly traded companies. There is also the risk of reduced investor confidence. 

• Media Scrutiny: Public narratives are often shaped within hours of a breach and can be incredibly hard to manage, especially for companies without a direct line to media outlets and journalists. 

• Brand Recovery: The cost of rebuilding public confidence cannot be understated. This has to be done through remediation with customers as well as public efforts to increase trust.

Executive Responsibilities Before a Breach 

Before a breach even occurs, there are steps that you can take to ensure that you have your bases covered as best as possible. Here are three steps for you to take right now: 

Know the Incident Response Plan: If you don’t already have one, then making one is top priority. It is important to know which steps to take right when a breach occurs. The longer you wait the greater the risk to the organization. Have a well-tested, updated, and role-assigned plan that is easily accessible to employees at every level. 

Ask the Right Questions: Chances are, you personally won’t know how to deal with or remedy these situations. Have a trusted third party group of cybersecurity experts that you can call when this all goes down. Know what you don’t know and then ask the right people. It may also fall to you to challenge decisions on funding and preparedness. Be prepared to engage in discussions about increased funding and process improvements post breach. 

Foster a Security-Aware Culture: This step is ongoing and undeniably crucial to the security of your organization. Fostering a culture that cares about data security sits at the heart of cybersecurity. Your staff should know the proper prevention procedures before a threat becomes reality. 

This process starts with top management, but it doesn’t end there. Cybersecurity is the responsibility of the company as a whole. There is no singular job or department that can prevent breaches, it takes effort from everyone in the organization. Every employee plays a critical role in fostering a security-first culture that helps safeguard the organization from evolving cyber threats.