Measuring the Hidden Costs of Cyberattacks on SMEs
Cyberattacks cost businesses around the world over $8 trillion in financial losses last year, but behind the dramatic headlines about costs that can be measured in Rands and cents is a hidden story of reputational damage and loss of credibility that can cost businesses a fortune in the long-term.
In this article we delve into the unstated losses that come in the wake of a cyberattack, study some common vulnerabilities, and find out how you can protect your business from the huge damage that hackers can do by breaching your data security.
Hidden Cost 1: Customer Confidence
One of the most valuable aspects of any brand is the confidence that customers place in the business and the word of mouth recommendations and positive online advocacy that this leads to.
On the flipside, however, once customers lose confidence in your business – especially if their personal data is stolen during a cyberattack – you need a comprehensive strategy to win back their trust or suffer reputational damage as a consequence.
It’s hard to quantify the exact amount that your business may lose as a result of declining customer confidence, but suffice to say that lost sales, a drop in referrals, and even online boycotts are all possible if your business suffers a major data leak or breach.
For some companies, the damage could run into millions or result in a major loss of business.
Hidden Cost 2: IP Theft
Intellectual property is becoming increasingly valuable with conceptual products accounting for 40% of US GDP in 2023.
Your confidential business plans or product prototypes falling into the wrong hands in a cyberattack could mean that your business could lose a competitive advantage, especially in the realm of manufacturing.
Copycat producers in countries with weak intellectual property laws are always waiting to undercut you in the market.
South African copyright and intellectual property laws are relatively strong and you’ll have a solid legal case to act against a local business that tries to copy your ideas – even if they’re stolen in a cyberattack.
Taking this type of action against a foreign business can be more tricky and certainly expensive, especially if international litigation becomes necessary.
Businesses should make sure that they’re insured against this type of outcome and that the amount of cover is sufficient to compensate them for the very real possibility of losses from IP theft.
Hidden Cost 3: Productivity Losses
Finally, a cyberattack can cause extended periods of downtime for your team as you struggle to bring your systems back online and eliminate the malware that was used in the attack.
During this time, your employees are likely to be distracted and less productive, and this could result in anything from delayed orders and invoicing to a total shutdown of operations for a week .
For some businesses, this could equate to hundreds of thousands or millions of Rand in lost productivity.
Compliance Costs: When things get very real
The cost of compliance with the PPI Act is a fact that businesses should bear in mind when it comes to cyber risk.
The Information Regulator is authorised to fine companies up to R10 million if customer information is mishandled in the event of a cyberattack. This is a very tangible amount for any business and underscores the importance of full legal compliance – no matter what size your enterprise may be.
The best way to avoid the hidden costs of cyberattacks is to make sure that your data is securely stored in encrypted form. Soteria’s range of secure storage packages for businesses provides all the data security that your enterprise needs. Visit our product page today to learn more.