Data breach costs go way beyond money

Data breach costs go way beyond the money an organisation needs to pay in fines and claims. Consumer trust and reputational damage can be just as costly.

With data breaches constantly in the news, we’ve never been more aware of the impact they have, with practically most people nowadays impacted by at least one breach out there. The numbers of victims in some of the big breaches have hit the millions, and when it comes to consumer confidence and the reputation of an organisation who suffers a breach, there are trends to be assessed.

Trust and reputational data breach costs can be the real killer in the long-term.

Data breach costs and profitability impact

Studies have already indicated that there is a link between data breach costs and organisational profitability as some consumers actively seek out ‘safer’ companies or avoid the big or repeat offenders.

Take an organisation like TalkTalk, for example. Their data breach history may well have led to some consumers avoiding them. The recent Dixons Carphone data breach was so big that we’d be very surprised if at least one person avoided them from now on, and then the likes of the avoidable Ticketmaster data breach has certainly put some people off using them again.

At first, these impacts may be small, but as time goes on and more data breaches occur, with some becoming repeat offenders, there’s little doubt that consumer trust and reputational damage may well have an impact. The data breach costs associated with trust and reputation could be far worse than the short-term hit caused by fines or the costs paid out for compensation claims.

What else can impact data breach costs?

There are additional factors in breach scenarios that can also impact the level of data breach costs. Factors such as time delays in reporting breaches to the authorities, or time-delays in notifying victims, can also impact trust and confidence going forward.

There was other research that previously indicated that trust and confidence is far less likely to be affected when an organisation comes clean right away and apologises for what’s happened. It’s when organisations appear to hide data breaches or forcefully pass the buck or blame elsewhere that may have a deeper impact on consumer trust and confidence.

The nature of the breach can also have an impact on data breach costs in terms of trust as well. Those organisations who are responsible for totally avoidable breaches may suffer worse reputational damage as well.