The Less-Obvious Fallout From a Cyber Attack

Zac Amos
The Less-Obvious Fallout From a Cyber Attack
Illustration: © IoT For All

The financial impact of cyber-attacks is well known, as are the social impacts of data breaches. However, a data breach’s impact can extend beyond financial losses and tarnished company reputations. What are the lesser-known effects of a cybersecurity incident? Here are eight consequences of data breaches that people may not normally think about. 

1. Lower Productivity

One major data breach consequence is how they can negatively affect a company’s workers. A cyber attack usually disrupts internal operations, leading to disorganization, confusion, and low morale as people try to regroup. Employees’ mental health and productivity can suffer in the process. 

This increased downtime and lower productivity usually reduces a company’s earnings. In fact, along with lost business and the cost of attracting new clients, downtime, and lower productivity account for 38 percent of the financial impact of data breaches. 

2. Business Closure

One of the worst data breach consequences is bankruptcy. Incredibly, 60 percent of small businesses that go through a significant data loss fail within six months of the incident. Within two years, 72 percent have gone under. The loss of credibility, poor search results, bad reviews, and financial impact of cyber attacks can all add up to a company failing.

3. Increased Regulatory Scrutiny

Another data breach impact is that regulatory agencies take notice. Regulatory bodies often conduct investigations into companies after a data breach. They may require a business to implement stronger security practices, comply with stricter requirements, or file reports about their use of customer data. 

These measures are good for customers but can be a huge headache for businesses. Failing to meet these new regulations can result in further scrutiny or financial penalties, making it even harder to regain regulatory credibility.  

4. Unexpected Expenses

The consequences of a data breach can also include unexpected costs, and there are often-overlooked financial impacts of cyber attacks. Companies without cyber security insurance end up paying for lost business, idle employees, and downtime. They may also have to pay the IT department overtime to help repair the damage. 

Another financial impact of cyber attacks is a direct loss of funds. In the worst-case scenario, a ransomware attack — in which hackers hold a company’s network hostage — forces a business to pay a large ransom to get their data back. 

Yet another potential impact of data breaches is fines. In 2021, data breaches affected 281.5 million people in the U.S., many of whom lost money or even their identity. Companies that mishandle or lose clients’ personally identifiable information (PII) may have to pay for damages, such as helping people recover lost funds after their bank account information was stolen. 

Businesses also have to pay for detection and escalation to identify the breach in the first place. After it occurs, they have to budget for the process of notifying partners, customers, regulatory agencies, and the general public about the incident. 

5. Tarnished CEO Reputation

Unfortunately, clients and investors who learn about a security incident often want to assign blame to somebody in charge. One lesser-known impact of data breaches is that people sometimes associate the problem with a company’s CEO. 

Of course, it may be more likely that the security team was at fault, but people may still blame company leaders even when they weren’t directly involved in the incident. It’s just human nature. 

6. Negative Search Results

One persistent data breach impact is that search engine results might reflect the incident for years to come. Potential clients who look the business up may be greeted by a wall of news stories about the cyber attack, driving them away from the company. People may even share the stories on social media or talk about the incident in person. 

Although a company’s marketing team will likely work hard to monitor social media, search engine results and online reviews, news stories, and comments about the data breach will still be available for anyone to find. 

7. Driving Off Job Applicants

If a security incident is still appearing in search engine results, job seekers might see it and decide not to apply for a position with the company. It can give the impression that the business has widespread issues across several departments, such as poor management or disorganization. Job seekers may also worry about how the company’s name would look on a future resume. 

8. Scaring Away Investors

Investors usually shy away from risk. They want to invest their money in financially stable, growing companies that make good business decisions. A lesser-known financial impact of cyber attacks is that investors might pull away and bet on more reliable businesses. That can lead to fewer chances for funding and even devaluation of a business. 

The Consequences of Data Breaches

While cyber-attacks are a fact of life, companies must do everything in their power to prevent them. The consequences of data breaches reach well beyond the obvious financial losses and poor business reputation — they can scare away investors, reduce productivity, and harm the reputations of C-suite executives. Implementing good cyber security practices allows businesses to uphold their reputations and protect themselves against bad actors.

Zac Amos
Zac Amos - Features Editor, ReHack
Zac Amos is the Features Editor at ReHack, where he writes about all things tech-related, from cybersecurity to AI to IoT.
Zac Amos is the Features Editor at ReHack, where he writes about all things tech-related, from cybersecurity to AI to IoT.