A common topic here on our blog is how to keep your business secure against modern threats online. Data security is an ever-evolving topic, and keeping ahead of the threats can be a difficult and costly task.
Even more costly, however, is not keeping up. The damage that can be caused to your business by not being secure, and so breaching laws and regulations, can be huge. Not only could you end up facing hefty fines, but the reputational damage that comes with bad publicity and losing customer loyalty can affect your business for years to come.
Today, we’re taking a look at the cost of non-compliance to your business.
Damage To Your Business
High-profile data breaches have made headlines around the world in recent years, and as a result most of us today are more aware of digital security and privacy than ever before. Because of that, tolerance for breaches has dropped among the public, and businesses that breach consumer trust or security laws are judged harshly.
A lack of trust in your business and security practices often results in fewer customers and lower spend with your business – after all, people don’t trust you with their data. This damage can have long-running effects, slashing your income over time, halting expansion plans and even forcing you to downsize your business.
Data breaches or irresponsible handling of data can bring legal trouble to your door as well. Aside from financial effects, covered below, this is obviously bad for you, your business and your customers, and can even result in your business being closed in some cases.
Financial Costs
The reputational damage to your business from failing to comply with data security laws can lead to severe financial issues too. Fewer customers mean lower income, of course, and you’ll invariably need to spend money on rectifying any issues and rebuilding your reputation after an incident.
Perhaps a bigger financial worry comes in the form of fines from local and international governments. The most well-known of regulations in this area is GDPR – the EU’s General Data Protection Regulation which came into force in May 2018.
The aim of GDPR is to protect personal data held by businesses about individuals, covering things like their name and social identity, as well as online information like IP address and location. To remain compliant, businesses are required to think more carefully about how they handle data, with a particular focus on keeping it safe and taking appropriate measures against threats.
The cost of breaching GDPR rules can be staggering – ranging up to fines of 20 million Euros or 4% of a business’s annual turnover, whichever is higher. The purpose of these tough penalties is to ensure that businesses take data security more seriously than ever.
Potentially even more eye-watering than the regulatory fines are the scope for class action type legal cases being brought by activist groups or lawyers working on behalf of affected data breach subjects. In large breaches these could massively outweigh potential regulatory fines. There are even concerns among the information security community that organisations could be deliberately breached and then sued over the breach by an organised cybercrime group allowing them to make money on both sides!
It’s in this post-GDPR climate that enterprise data security has become perhaps the most pressing issue for most businesses. Suites of tools exist that help you to remain compliant with GDPR and other rules, like the US HIPAA regulations, for example, giving businesses many options in their quest to be compliant.
It’s clear though that the cost of non-compliance can indeed be huge today – not only might the reputation of your company never recover from a serious breach, but the financial cost can even spell the end for your business.
