Can a Security Breach Disrupt Business?

No matter the size, almost every company relies on computer systems for conducting daily business. If those systems are compromised, business will certainly be disrupted. Shockingly, approximately 80% of small businesses that suffer security breaches go bankrupt or suffer major losses financially within two years. Based on several intelligence and security studies, the impact of security breaches can be minimized by developing an effective security breach strategy. 

According to the 2013 Global Corporate IT Security Risks intelligence and security studies, large companies incurred an average of $649,000 from security breaches; while small companies averaged approximately $50,000 in costs. In addition, the Ponemon Institute's intelligence and security studies state that security breaches cost businesses $188 per record. 

Most intelligence and security studies explain the costs associated with security breaches as: 

  • Direct costs are the expenses that are accumulated from particular activities like hiring a lawyer, hiring forensic experts, or offering victims identity theft services after the breach has occurred. 
  • Indirect costs include all of the effort, time, and additional organizational resources used to resolve the security breach. Additionally, the indirect costs include customer churn and the loss of goodwill. 

Causes of Security Breaches
Based on the Ponemon Institute's intelligence and security studies, (PDF) there are three main causes of security breaches.

  • Malicious or criminal attacks are the most costly and account for 41% of all incidents. 
  • Human error or negligent employees accounted for 33% of security breaches. 
  • System glitches accounted for 26% of the data breaches in the United States. System glitches includes both business process and IT failures.

How to Minimize the Impact Disrupt Business
Intelligence and security studies suggest that the impact of a security breach is dependent on what you do before the breach happens. 

  • Enact security measures that are reasonable to your line of business. 
  • Secure all physical stationary and mobile storage devices.
  • Limit retaining data beyond the time it is necessary.
  • Make sure your industry isn't subject to special requirements or duties
  • Place auditing and monitoring measures to ensure the security of your business data. 
  • Educate and train your employees. 
  • Ensure that everyone in the company follows security policies and agreements.
  • If you use a third party provider to maintain or store data, make sure you carefully select the provider.
  • Consider cyber-insurance liability coverage to minimize the losses of a security breach.
  • Develop a security breach response plan to minimize the costs of a breach and effectively handle all of the aspects. 

All intelligence and security studies suggest that security breaches disrupt business and carry a significant number of associated costs. However, the propensity of the disruption to business and costs from the breach can be effectively minimized by taking preemptive measures and understanding security risks.

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