The consequences of a successful cyberattack can be catastrophic for a business, ranging from reputational damage to financial loss and even bankruptcy.
In this blog post, we'll explore the various ways that cybercrime can ruin companies, highlighting real-world examples of organizations that have fallen victim to these attacks.
Damage to Your Reputation
"So much depends on reputation - guard it with your life. Reputation is the cornerstone of power. Through reputation alone you can intimidate and win; once it slips, however, you are vulnerable and will be attacked on all sides. Make your reputation unassailable." Robert Greene, 48 Laws of Power
You may lose all credibility in the eyes of your clients and potential clients. Customers can easily go to your competitor, who has never been hacked before. The gravity of the cyber-attack may even be exaggerated by your competitors to destroy you. These are just some of the ways your reputation is damaged in the event of a successful cyber attack.
A successful cyber-attack can cause your company to be directly associated with negative connotations such as incompetence or untrustworthiness. You would want your company’s name to be associated with positive causes that elicit positive emotions, not negative ones.
Even if your business is small, it can still be the subject of your local media's attention once it suffers a cyber-attack. You may be portrayed as careless or even unethical, which tarnishes your company's reputation.
Wouldn’t it be better if your company is rather in the news for a new milestone, innovation, or achievement?
Lawsuits and Penalties
With all the new laws being passed around cybersecurity, what is your company's compliance status?
If your answer is “I don’t know”, there’s a good chance that you are prone to a cyber attack and all the lawsuits and penalties that come after it.
The law regarding breach notification statutes remains constantly changing, with a growing push for stricter legislation and heavier fines for companies that experience data breaches. This is not limited to large corporations - small businesses that collect customer data are also subject to these laws, with 47 states and the District of Columbia having their data breach regulations.
Businesses in the healthcare or financial sectors are subject to additional notification requirements under HIPAA, SEC, and FINRA.
One cost after the other
Did you know that the average cost of a data breach is $225 per record compromised?
This is according to the Cost of Data Breach Study conducted by Ponemon Institute after factoring in IT recovery costs, lost revenue, downtime, fines, legal fees, and other fees.
A single security breach, ransomware attack, or employee misconduct can cause a great deal of extra work for a company's staff, who are already stretched thin. This can result in business disruption, delayed work delivery for existing clients, lost sales, and additional costs for forensics investigations and IT restoration. If a ransom is demanded, it may need to be paid, and there may also be legal fees and the need for legal advice to deal with clients and the media. As a result, cash flow will be severely impacted, budgets may be exceeded, and some states may require companies to provide a year of credit monitoring services for affected customers.
How many client records do you have? Employees? Multiply this by $225.00 and you’ll get a rough estimate of how much it’ll cost you if you suffer a cyber-attack.
Here’s a true story: Verne Harnish, CEO of Gazelles, Inc., a very successful and well-known consulting firm, and author of the best-selling book The Rockefeller Habits.
Harnish had $400,000 taken from his bank account when hackers were able to access his PC and intercept e-mails between him and his assistant. The hackers, who are believed to be based in China, sent an e-mail to his assistant asking her to wire funds to 3 different locations. It didn’t seem strange to the assistant because Harnish was then involved with funding several real estate and investment ventures. The assistant responded in the affirmative, and the hackers, posing as Harnish, assured her that it was to be done. The hackers also deleted his daily bank alerts, which he didn’t notice because he was busy running the company, traveling, and meeting with clients. That money was never recovered, and the bank is not responsible.
In general, federal law requires banks to reimburse customers for unauthorized transactions from their accounts if the customer reports the fraud promptly. However, if the bank can show that the customer was CARELESS with their account information or failed to report the fraud on time, the bank may be able to limit or DENY reimbursement.
Claiming ignorance is not a valid defense, nor is shifting the blame to your outsourced IT company. YOU will be responsible, and YOUR company will bear the burden.
Using YOU As the Bridge To Infect Your Clients
Some hackers do not steal your data or demand a ransom but rather use your server, website, or profile to spread viruses or compromise other computers.
For instance, if they hack your website, they can use it to send spam, run malicious software, create search-engine-optimized pages, or promote their own religious or political beliefs.
Would you be comfortable with this kind of activity happening on your website?