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What are the consequences of data breach?



Did you know that 93% of data security breaches takes less than one minutes? Yes, it takes less time for a hacker to penetrate a system than it takes to make a coffee!


In contrast, 80% of companies takes weeks and even years to recognize that a breach has occurred! In a well known case, it took 4 years for the organisation to realise that their data was compromised! Can you believe this… 4 years of information?


According to studies, 86% of business leaders, believe that information security is a concern and that the system of security should be checked and updated regularly, at least once every 6 months.


We all agree and understand the importance of information security and data protection. But what are the consequences of a breach of data?


Here below are 5 consequences of a data breach.


1. Financial Loss.

Financial loss can occur in different ways.


There is the direct financial loss where a hacker could steal money from a company’s bank account by giving a fake instruction of transfer to the bank.


Furthermore, there are fines and compensation to clients for breach of data. In a case where a breach of data is confirmed, the EU commission could fine an organization for breach of GDPR. On the other side, clients/customers could ask for compensation for breach of data as well.


Studies reveal that businesses affected by a data breach could end up losing more than 20% revenue. Meaning that the organization could perform less that previously, the case of Yahoo being a good example.


2. Reputational loss.

Reputational loss is also a very damaging consequence of data breach. Loss in reputation eventually lead to loss in revenue in the long term as customers/clients are more careful and hesitant to deal with an organization which was victim of a breach of data.


Studies revealed that up to 81% of customers would stop transacting with an organization if they suffer from data leak.


Can you imagine losing 81% of your client base?


3. Loss of competitive edge.

Reports suggest that 60% of cyber-attacks are against small and medium enterprises as they are the most vulnerable. On the 60% attacked, it is reported that 60% go out of business in the next 6 months following the attack as they end up losing competitive advantage such as intellectual property, trade secrets, strategic partnerships and other business relations due to the breach of data.


Losing competitive edge is also applicable to big companies. For example, in 2020, a hacker stole highly sensitive information regarding the Xbox Series X graphics source code, as well as test files for a portion of current and upcoming graphics hardware from the company. Imagine if you were a competitor, what would you do with those information?


4. Online Vandalism.

The end goal of hackers is not necessarily financial gain. Some hackers consider themselves as pranksters and like to play tricks with their victims. For example, in March 2020, a hacker disrupted the presidential campaign of Donald Trump by defacing the latter’s website. In this case, the modification was obvious but in some cases there are few subtle changes which goes unnoticed but causes lot of damage.


Online vandalism is a result of data breach. Once a company is victim of data breach, more hackers come to test their skills on a newly upgraded security system.


5. Opportunity costs.

According to reports, 77% of business leaders underestimate the implications of data breach. They understand that there might be financial loss ultimately but they do not understand the breakdowns. Most of them do not foresee the cost of legal actions against them, they do not anticipate increase in insurance premium, they do not evaluate the loss due to disruption of operation, etc.


All in all, a breach of data implies lot of opportunity cost. The organization finds itself embarked in all sort of tasks to control and resolve the breach of data instead of doing business as usual.


If you feel that your information security is at risk, Ascentrix Consulting can help you assess your information security management system. We helped various organization mitigate their risks level, in accordance to data protection regulation applicable. Do not hesitate to contact us for more information.


Otherwise, if you would like to know more about data protection (GDPR), click on the link below.



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