5 Ways Data Breaches Affect Organisations

Updated: Sep 30


RiskXchange can discover and continuously monitor the security posture of your organisation.


Data breaches are becoming increasingly more common within businesses right around the world. Figures shows that around 28 percent of organisations are susceptible to data breaches, with one breach alone able to cause several million pounds worth of damage. 

Exposure of sensitive data and personal customer records can result in excessive fees, fines, security costs and lost business revenue. Data breaches not only cause huge financial losses but can also damage your reputation and ruin trust in the organisation. 


It’s extremely important for any organisation, entity, or business to understand the true magnitude of data breaches so they can take the necessary steps to mitigate cybersecurity risk and protect their company and its customers. Here we have highlighted the 5 ways data breaches affect organisations and what you can do to prevent them from happening. 


1. Financial implications


A data breach can be extremely expensive and the overall impact one might have on an organisation can snowball year-on-year. Ponemon Institute’s 13th annual Cost of a Data Breach study calculated that the average cost of a data breach globally currently stands at roughly GBP 3 million. 


The study also found that the average cost of each lost or stolen record rose by 4.8 percent last year, reaching GBP 100 for every record containing confidential and sensitive information. Whether your company has millions of personal records or a small customer database, data breaches that expose sensitive customer information can be costly. It’s therefore fundamentally important to identify any cybersecurity risk and tackle it head on. 


Here’s why data breaches can be so expensive:


Regulatory fines: Each country has its own security breach notification laws that require companies to disclose to their customers and other entities when a breach has occurred. In Europe, the General Data Protection Regulation (GDPR) is applied – an EU regulation on privacy and data protection. The GDPR covers the transfer of personal data both inside and outside of the EU and EEA areas. The GDPR gives control to individuals over their personal data and increases the obligations of organisations to deal with that data in secure and transparent ways. 


If a business fails to comply with these laws, they could receive astronomical fines, face closure or repetitional damage. Organisations may also be held accountable to industry-specific regulations for data security, such as the HIPAA Breach Notification Rule in healthcare. It’s always important to remember that reducing cybersecurity risk is key to protecting your business and its assets. 


Legal fees: If data breaches lead to a leak of a customer’s credit card information, for example, your company may be subject to lawsuits, legal fees, and settlement costs.


Security expenses: Once a data breach has been identified, organisations must improve data security by investing in new technology and expertise to reduce cybersecurity risk. 


PR expenses: Data breaches can do a massive amount of short and long-term damage to an organisation. You may well be able to patch up the problem soon after it’s happened, but the damage to your reputation could last much longer! Hiring expensive PR firms to repair the damage may turn out more expensive than securing your system in the first place. 

Lost revenue: Due to the simple fact that you may have suffered just one data breach, people will lose confidence in your organisation and take their business elsewhere. It’s difficult to calculate exactly how many people will leave an organisation following a data breach or how many will be put off after hearing of one, but the impact can be quite significant. 


2. Loss of productivity


Data breaches can lead to a massive loss of productivity. Minimising cybersecurity risk is key to fighting some of the basic cyberattack methods used today. 


A ransomware attack — an attack that encrypts files then hackers demand a ransom for the decryption key — can bring businesses to their knees. A Denial of Service attack, or any other type of attack can only be salvaged by professionals. It’s not always possible to protect your business 100% of the time but minimising your cybersecurity risk is key to protecting your organisation against data breaches.


3. Reputation

Your partners, clients, customers, and third-party vendors trust you with their data. If you suffer any type of data breach then all your data has been compromised which, in turn, can lead to loss of trust between partners and any other business-related relationships that come with it. Press leaks, investigations and even word of mouth can lead to a loss of business and a dip in revenue. We’ve covered PR expenses above, but that’s just the start of it. Your reputation is the most important aspect of your organisation so protect it. 


It’s important to protect your reputation by defending your network with the best cybersecurity defence measures available. RiskXchange provides a powerful AI-assisted, yet simple automated and centralised unique 360-degree cybersecurity risk rating management approach. We generate objective, quantitative reporting on a company's cyber security risk and performance, that enables organisations with evolving business requirements, to conduct business securely in today's open, collaborative, digital world.


4. Stock protection


A company’s stock value can be heavily affected by data breaches. Almost immediately after a breach has been disclosed, one that involves customer or consumer information can cause a company’s stock to plummet. A study conducted by the Ponemon Institute in 2017 tracked stock prices for 113 publicly traded companies that had a data breach and found that stock prices dropped an average of 5 percent after the public announcement of a data breach. However, the study also found that this can be recovered quickly if organisations take the right actions following a breach to tackle the problem and minimise cybersecurity risk. 


5. Business continuity


As we’ve highlighted above, data breaches can do long-lasting damage to your organisation so it’s important to be prepared. If you fail to protect your business against some of the more basic cybersecurity risks out there then you can lose customer trust, revenue, productivity, and potentially be taken to court. It may also affect the sale of your company in the future. This only demonstrates the importance of using a cybersecurity firm like RiskXchange to discover and continuously monitor the security posture of your organisation. Don’t forget that maintaining business continuity should last from inception right through to the present day.


About RiskXchange


RiskXchange is an information security technology company, that helps companies of all sizes fight the threat of cyber threats by providing instant risk ratings for any company across the globe. RiskXchange was founded and is led by recognised experts within the security industry, who have held leading roles within companies such as IBM Security. 


Find out more here.

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