Although many people focus on the brands that get singled out during data breaches and other cybersecurity incidents, they often stop short of examining how these issues affect the global economy. Cybersecurity shortcomings have long-lasting and far-reaching consequences that impact society at large.
The Domino Effect of Cybersecurity Incidents
The primary victims of cybersecurity hacks are the names that capture headlines, but other brands feel the resultant sting, too. An infographic from an internet security firm profiled the 2013 Target data breach and cited $71 million in lost revenue and $61 million in associated expenses for the company. However, since the breach also affected tens of millions of Target’s credit cards issued by well-known providers, those associated companies also dealt with issues stemming from fraudulent transactions caused by identity theft.
Then, there’s the reality that credit scores are used as gauges of financial stability when people buy cars, apply for loans or even search for housing. If the people who had their data snatched in the breach aren’t mindful to check their credit reports for strange activity, they could find themselves facing restrictions as they try to achieve financial goals.
Stolen Records Come With Staggering Costs
Statistics from the Breach Level Index indicate there are almost 5 million records stolen around the world daily, which works out to 58 per second. To make matters worse, many breaches go undetected for months, making it difficult to know the full associated costs.
The 2017 Ponemon Cost of Data Breach study, which was sponsored by IBM, indicates that the average global cost of a breach is $3.6 million. Also, the expenses per stolen record went down slightly in 2017 to total $141. The year before, it was $158. However, it’s important to realise that the decreased cost per record is not a reason for excitement. The size and scope of data breaches are on the rise, so even if the financial impact per document is slightly less, companies don’t see a favourable impact from the change because they’re dealing with more extensive breaches.
How Do Breaches Affect Consumer and Investor Trust Levels?
Analysts say breaches don’t have the drastic and immediate effects one might expect for a company’s stockholders. That’s because shareholders don’t have enough information to measure the impact of data breaches accurately, plus companies often don’t disclose cybersecurity issues until months after they occur. Therefore, shareholders tend to only react to data breaches that directly affect a company’s immediate profitability or operations. Similarly, cybersecurity issues don’t typically make customers stop doing business with the affected brands.
A survey from RAND Corp. found that about 105 million American adults got notifications about being affected by data breaches. However, of those, only 11 percent stopped doing business with the companies.
The Industries Most at Risk for Drastic Losses
Some sectors are more likely than others to suffer tremendous downturns after cybersecurity incidents. One of them is the medical industry. Some health facility brands have presences in multiple states or countries, leading to potentially sizeable effects due to the erosion of consumer trust. Plus, representatives from health facilities weigh various factors before making equipment purchases. Brands targeted by cybercriminals may have difficulty convincing the respective individuals that the security lapses have been fixed and will not reoccur.
The retail sector can also suffer significant losses due to poor cybersecurity practices. One of the reasons for that is that parent companies often own numerous brands and use the same infrastructures for all of them. In April, news broke of a cybersecurity firm finding evidence of hacks that affected more than 5 million credit or debit card holders who made in-store purchases at Saks Fifth Avenue, Lord & Taylor and Saks Off Fifth around the U.S., but primarily in New Jersey and New York.
When companies have several brands under their corporate umbrellas, hackers have a broader-than-average reach, allowing them to carry out widespread damage. Criminals love the prospect of infiltrating the financial industry too, due to the high-risk/high-reward situation that could result in lucrative outcomes for the offenders that successfully orchestrate their plans.
Hackers can target ATMs and web apps as their starting points, and a test carried out by the cybersecurity firm Positive Technologies found that banking sites and online apps are particularly at risk for attacks.
The company did not name the banks it tested. However, it clarified that 80 percent of them did not have adequate protection against cross-scripting and XSS attacks.
Since banking brands are often spread out in their respective countries ” and sometimes have international presences ” the likelihood of large-scale, economically costly attacks is high. Banks continually improve their cybersecurity strategies, but as the Positive Technologies test indicates, there is still work to do. It’s not possible to convey the entirety of all-encompassing economic impacts due to insufficient cybersecurity measures. However, the facts presented here should be enough to make anyone take notice and realise this is no time for complacency.
