What is the cost of a cyberattack?

Do you know what being the victim of a cyberattack costs a company? Beyond theft of information and money to be paid out, a cyberattack can mean a significant loss of reputation for the company.

The high price of digital insecurity

First of all, we need to be clear that being the victim of a cyberattack implies very significant financial expense, but also a serious impact on a company’s reputation.

Loss of reputation due to a cyberattack can be very costly, both financially and in terms of eroding the trust and credibility of your customers and suppliers. According to some studies, the average cost of a data breach can reach $4.35 million. For example, in Mexico, a company can lose $1.5 million (approximately 25 million Mexican pesos) in a cyberattack.

These costs include the expense of identifying and resolving the security breach, downtime, and lost revenue. Additionally, there are long-term effects on the company’s reputation and brand, with significant repercussions on customer trust and business relationships.

The trust of clients, suppliers, partners, and authorities may be affected, and this could lead them to seek out more reliable, secure alternatives. This change results in lost business opportunities, reduced market share, increased competition, and decreased customer loyalty to the company, which could have a negative impact on its overall performance.

Painful lessons in cyber-crisis management

When Sony Pictures’ confidential information was leaked and its reputation was affected, customers lost confidence in the brand, partners reconsidered whether to continue working at the company, and its public image was immediately damaged.

In extreme cases, a cyberattack can lead to the permanent closure of the company. This was the case in 2014 with Code Spaces: a technology company that suffered a cyberattack that completely erased its information. All the data, backups and configurations were deleted. After this, the company had no possibility of recovering the information. In less than 24 hours, Code Spaces had to announce its closure, proving that just one cyberattack can lead to a company’s bankruptcy. This fact highlights how vulnerable companies are to cyberattacks, and also demonstrates how important it is to anticipate these problems so as to react quickly and effectively.

Some of the expenses that a company must face after a cyberattack are the costs of systems recovery, hiring external services to assist in incident and crisis management, legal support, and communications consultancy, among others. However, there are also costs such as loss of revenue due to downtime, or compensation to affected customers or users. It has been proven that the consequences of data theft at a business not only result in a significant loss of reputation, but also have a long-term impact on the company’s financial health.

How can I protect my company’s reputation?

Cyberattacks are a direct threat to companies’ very existence. It is essential for organizations to promote proactive cybersecurity strategies to store and safeguard their information, protect their assets, and ensure their survival in the digital environment. They should also apply effective crisis management techniques to minimize the negative impact on their reputation and financial stability. Cybersecurity experts recommend:

• Assessing risks to identify and minimize vulnerabilities.
• Training employees on cybersecurity practices.
• Strengthening security with firewalls and access control.
• Implementing data backups for recovery after incidents.
• Developing an incident response plan to act quickly.
• Complying with data protection regulations and adopting best practices.
• Regularly reviewing and updating security strategies.

We hope you found this information useful. We would be happy to provide more details about the cost to a company after a cyberattack and its subsequent loss of reputation. Don’t hesitate to contact us or visit our blog for more information.