Every year, IBM and the Ponemon Institute partner up to study the cost of data security breaches in various countries across the globe. The research is conducted in 12 countries and this year, South Africa was one of the dozen nations under investigation. According to the research, South Africa and Brazil have the highest estimated probability of experiencing a data breach.
The study reveals that the cost of data breaches is rising. The average total cost of a data breach in South Africa in 2016 was $1.87 million, which equates to roughly R25 million. The research also highlights that health care, finance and education were hit the hardest by data breaches in 2016 and that the majority of these breaches were due to malicious criminal acts.
Despite advances in IT security infrastructure and a broader understanding of the risks, the report does stress that all companies - be they in Japan or Brazil; in the retail or research industries - need to take security seriously. Especially when you consider that the ramifications of system downtime or a cyber attack extend much further than your business’s bank balance.
Here are a few hidden costs that you may not be aware of:
- Insurance premium increases: According to Deloitte, companies can experience as much as a 200% increase in premiums for the same coverage following an attack. They could even be denied coverage altogether if they can’t prove that they’ve upped their defences.
- Operational disruption: If your business isn’t running as it does on a normal day, there will be financial repercussions. Generally, a breach or malicious attack means that all resources are focused on righting the ship, which could see certain tasks falling by the wayside.
- Damage to customer relationships: Studies show that targeted companies are likely to experience significant reputational damage. A cyber attack can cause customers to lose trust in the business. Loyal customers may move over to a competitor because they fear that you are not keeping their information safe.
- Loss of revenue: Unsurprisingly, if your systems aren’t running and your customers are flocking to your competition, you’ll experience a drop in revenue. In 2013, when the US’s second-largest discount retailer, Target, fell victim to a data breach, they reported a 46% drop in profit and their sales fell by 5.3% as security concerns scared off customers.
- Intellectual property loss: Deloitte describes this as an intangible cost as it is difficult to put a value on things like trade secrets and investments strategies. But when criminals have access to your designs and business ideas, the ramifications can be huge.
If you’re looking to reduce the risks associated with cybercrime, it’s best to take a proactive, rather than a reactive approach. Whether you’re at home or at work, you want to feel safe. We have all the solutions you need to ensure that your business doesn’t become another data breach statistic.
Want to find out how protected you really are? Download our Enterprise Risk Assessment Checklist to better understand your security strengths and weaknesses.