Why is information security important for a company?
Organizations feel the cost of not having proper data security in their wallets, their credibility, and their customer retention rates.
What is data security?
Data security is using hardware or software to prevent unauthorized users from accessing websites, databases, and computers. It protects information from being leaked, compromised, or stolen, and in turn, it benefits the company or individual by protecting customer privacy.
Let’s take a look at the facts on data security.
- Hackers attack every 39 seconds.
- Cyber criminals steal a record every 44 seconds.
- Between 2017 and 2021, cybersecurity will be a $1 trillion industry.
- Only 38% of businesses are ready for an attack.
The economic impact of data security
Cyber crime costs about $100 billion a year. Experts expect that number to hit $6 trillion per year by 2021. That’s how fast cyber crime — and cybersecurity — is growing. Companies across the world are ramping up cybersecurity budget lines to deal with rapidly advancing threats. Some businesses are investing in cybersecurity insurance.
Target had $100 million of such insurance, but when hackers cracked Target’s security wall, the company lost $450 million as well as a lot of credibility with the public and shareholders. About 85% of company resources are digitized so one big break-in, and an astounding amount of liquidatable assets could vanish.
Large companies like Target aren’t the only victims. An estimated 43% of cyber attacks hit small businesses. Of those businesses, 60% will close within six months because of the financial blow and the loss of credibility among customers.
Companies lose credibility after a cyber attack.
In the age of the internet, nothing is secret. Shareholders, board members, investors, and customers know when a company gets hit with a data breach. Credibility disappears along with the data.
The company can recover its information faster than its reputation. Investors expect their dollars to be kept safe. Customers need to believe their private data is just that — private. If your company gives them reason to believe otherwise, your credibility takes a big hit.
In some cases, hackers with a personal axe to grind may be more interested in damaging your credibility than in taking your assets or customer records. Maybe they want to send vile Tweets using your handle, post racist rants on Facebook under your name, or plaster pornography on your company’s LinkedIn account. You may clean it up, but the damage can linger.
What’s the impact of losing credibility? It may depend on your size.
Target forked out an $18.2 million settlement after its data breach. But the company is still going strong. LinkedIn and Yahoo! have also been compromised due to breaches, and yet LinkedIn is flourishing and Yahoo! holds its own.
Smaller, more niche enterprises, however, may not have the resources for a major settlement like Target or the public relations skill to make a comeback like LinkedIn. In their cases, customers are gone for good.
How data breaches affect customer retention
According to Jason Hart, vice president and CTO for Gemalto’s data protection solutions, data breaches are taking a toll on customer loyalty. The numbers don’t look good for companies:
- 67% of customers say they fear their data will be stolen (they have good reason to).
- 63% say if their data is stolen they will blame the company who was the victim of the theft.
- 93% say they would sue or take other legal action against an enterprise where their data was compromised.
Clearly, customers fear exposure. While most computer users indicate they take very little responsibility for protecting their own data, they appear to have high expectations for companies to do so. In fact, customers expect banks — the most frequently targeted industry — to be nearly unhackable.
A huge margin of customers who cease doing business with a vendor after a public scandal never return.
The good news is that about 80% of data breaches use only low skilled hacks, most black hat hackers make very little money, and cybersecurity is a flourishing industry. To take advantage of data security options that prevent loss, learn more about what an IT managed service can offer you.