Running a business involves continuously collecting customer data, such as identity and behavioral information, to personalize user experiences and process orders. Without this data, a company would struggle to operate efficiently and fulfill contracts. Consequently, data breaches that corrupt or steal this information pose significant threats to business owners.
What Are Data Breaches?
Data breaches are security incidents where unauthorized third parties access sensitive information. These breaches can occur due to various reasons, including employee negligence or cyber attacks like phishing and malware. Such incidents compromise confidential information about a company and its customers, but what does that mean for your small business?
Are Breaches More Dangerous For Small Companies?
There is a common misconception that cyber crimes predominantly target larger companies due to their substantial funds and extensive data. However, the Verizon State of Small Business Survey from January 2024 reveals that 51% of small businesses lack adequate data security, including training, tools, or experience in handling cyberattacks. This makes them easier targets compared to their larger, more protected counterparts.
Here are some ways data breaches can impact small businesses:
Financial Losses to Resolve the Issue
According to Fox Business, it costs between $10,000 to $100,000 for forensic experts to identify and analyze a breach. Larger companies are typically better equipped to absorb these costs. In contrast, smaller businesses often need to outsource consultants, attorneys, and crisis management services to address and eliminate the threat effectively. These expenses can be overwhelming for small businesses, leading to financial instability. Cybercrime Magazine reports that 60% of small businesses shut down within six months following a cyber attack, highlighting the severe risk to a company’s longevity.
Increased Customer Turnover and Revenue Loss
Data breaches involving customers’ personal information, such as names, ages, and financial details, can severely damage trust. Upon notifying customers about a breach, businesses should set up a call center for addressing concerns and providing information about the next steps. Offering free credit monitoring and other services can help with damage control, but many loyal customers may still choose to leave for competitors. This results in increased customer turnover and revenue loss, illustrating the indirect costs of breaches.
Damaged Reputation Among Customers and Employees
Data breaches affect not only customers but also employees, whose personal information may also be compromised. This can lead to a loss of employees and job applicants due to a tarnished reputation. Additionally, a breach can result in a credit rating downgrade, leading to:
- Negative media coverage
- Higher interest rates from investors
- Reduced ability to secure financing
Given these potential consequences, it’s crucial for small businesses to take proactive measures to enhance cybersecurity today. By doing so, they can better protect their data and safeguard their future.
There is never a better time than now to contact Integrated Technology Systems. Call now BEFORE a data breach occurs and customer and employee trust is lost.
Integrated Technology Systems
6 East 45th Street, Suite 400
New York, NY 10017
212-750-5420
https://www.itsnyc.com
