With businesses storing internal and customer data on online networks, they become more vulnerable to cyberattacks and breaches. Dealing with cybercrimes increases the cost of cybersecurity, which can ultimately increase prices for consumers. According to business insurer Hiscox, companies lost almost $2 billion to cybercrime in 2019. Big companies with a strong online presence have become heavily targeted and few businesses are safe. Companies that endured the heaviest losses are those in the energy, financial services, manufacturing, technology, and pharmaceutical sectors. 6% of companies paid some form of ransom to regain control of critical IT systems, resulting in losses of $381 million. Companies that experience cyberattacks face higher costs resulting from operational disruptions and altered business practices. The biggest losses come from reputational damage in which companies paid millions to settle claims due to losing control of customer data.
Here are six important ways that cybercrimes can impact businesses.
1. Increased Costs
To protect themselves from cyber thieves, companies often pull out their wallets and incur numerous expenses. These include enhancing cybersecurity technology and expertise, notifying affected parties of a breach, paying higher insurance premiums, and building public relations support. Ransomware can cause a major financial burden by preventing workers from accessing IT systems unless companies pay threat actors a ransom. Additionally, to remain compliant with cybersecurity regulations, companies must hire lawyers and other experts. If companies become victims of a cyberattack, they have to pay even more in attorney fees and damages resulting from civil cases.
2. Disrupting Operations
In addition to financial damages, companies face indirect costs from cyberattacks including major interruptions to operations resulting in lost revenue. There are numerous ways cybercriminals can disrupt a company’s normal activities: infecting computer systems with malware, erasing valuable data, installing malicious code on a server, or blocking access to a company’s websites. Threat actors have been known to disrupt computer systems with of major companies, government agencies, and multinational corporations with the interest of calling attention to a perceived wrong or increasing transparency.
3. Altered Business Practices
Cybercrimes also impact companies in non-financial ways. They might have to find alternative solutions to collect and store information to ensure that no sensitive data is vulnerable. Many companies stop storing customers’ financial and personal information including credit card numbers, Social Security numbers, and birth dates. To protect against cyberattacks, some companies even shut down their online stores. Customers want to know how companies address security issues and are more likely to favor those that are upfront and vocal about the protections they have installed.
4. Reputational Damage
Companies that become victims of larger cyberattacks may find their brand tarnished. Customers and suppliers are often hesitant to leave their sensitive data with companies whose IT infrastructure was broken once before. With the addition of having reduced institutional trust, publicly traded companies are likely to see a short-term drop in market value. Compromised company’s share prices drop an average of 3.5% following a cyberattack and underperformed the Nasdaq by 3.5%.
5. Lost Revenue
A drop in revenue is one of the worst outcomes of a cyberattack. Customers cautiously move elsewhere to protect themselves against cybercrime, resulting in lower total income. Companies also lose revenue from threat actor extortion, such as ransom payment, and lost future contracts due to a weakening of overall trust in the organization. According to an IT firm, companies lost on average between $24,000 and $504,000 (based on company size) in 2020 due to cyberattacks.
6. Stolen Intellectual Property
The most valuable assets are a company’s product designs, technologies, and go-to-market strategies. According to an intellectual property advisory company, 87% of the value for S&P 500 organizations is found in their intangible assets. A majority of companies store their intellectual property in the cloud where it’s vulnerable to cyberattacks. Nearly 30% of U.S. companies reported that a Chinese counterpart stole their intellectual property.
Companies protecting themselves against cyberattacks can be costly and impact the relationship between the company and its customers. With cybercriminals becoming more sophisticated, it’s crucial for companies to stay current with the latest threat landscape and improve network security measures to avoid operation disruption, financial loss, and reputational damage. SpearTip’s global security operations centers defend companies at any time day or night. We can respond to advanced threats at a moment’s notice to reduce costly business disruptions and protect your organization’s reputation. ShadowSpear, our endpoint detection and response tool, is easily implemented into the current software of businesses of any size and is designed to meet the challenges of sophisticated and distributed IT environments. ShadowSpear can identify threats immediately, neutralize them before they take hold in your environment, and counter attacks from your adversary. As businesses continue to be targeted by malicious threat actors, SpearTip defends you.
If your company is experiencing a breach, call our Security Operations Centers at 833.997.7327 to speak directly with an engineer.