It’s no secret that data breaches can cause immediate financial damage for companies. Or that they can attract a certain shade of limelight that companies don’t find flattering.
We’d like to tell you that the buck stops there, but unfortunately, the reality is that the costs of a data breach go much deeper and the business impacts can be much more insidious.
Welcome to the dark reality of the hidden costs of data breaches.
A recent research report from Deloitte examined the damages caused by incidents that run deeper than most of the commonly cited figures. There are a wide range of direct and intangible costs that contribute to the overall impact of a breach and go far beyond the surface. The true costs of a data breach can be almost impossible to measure completely.
At the surface level, there are things like notification costs, forensic audits, investigations, regulatory compliance costs, possible legal fees, lawsuit payouts, IT security infrastructure improvements, new security hires, public relations campaigns and post-breach customer protection, to name just a few. It’s been a well noted industry stat that the cost of a breach impacts an average company around $3.8 million. For large enterprises it is far more.
Dig a little deeper though and you quickly find out that can be just the tip of the iceberg, depending on the size of the breach. There can be significant costs associated with operational disruption at the time of the hack or afterwards during the investigation and repair phases. Increases to insurance premiums and loss of intellectual property can also occur.
But perhaps most importantly – what about your customers? The devaluation of brand and damage to customer trust can wreak havoc on the profitability of a company, and the study shows that these intangible body blows cannot be quickly remedied. Once the damage is done, in many cases it can take years to recover from.
There are billions of players out there in today’s economy – and the importance of customer trust can’t be understated, but it can be estimated. Brand value and customer trust are key differentiators that can make or break a company. Unfortunately, these factors are incredibly vulnerable to breaches but they do have lessons to teach companies who are willing to learn more about who their customers are – and the fortunate thing about that is we all need to do more of it.
It’s enough to make your head spin.
The trick to protecting customers (and keeping their trust) is to provide the customer with a good experience by using a multifaceted approach that leverages behavioral analysis and machine learning to verify the good user behind the device without any impact to the customer. When you focus on your good users, the bad actors are quickly spotted and they can be skimmed away without good users even noticing a bump. By implementing an approach like this, you can ensure you are protecting against the most important of these so-called hidden costs – brand reputation and customer retention.
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