Data is the lifeblood of all businesses in the 21st century. Organizations use data for competitor analysis, market behavior prediction, process optimization, and more. With the right data, companies can easily get an edge in their industries and optimize their performance to lower costs and make higher profits. This explains why cybercriminals are constantly launching attacks on organizations’ data systems.

A data security breach can cause significant damage to your business. Depending on the type and extent of the cybersecurity breach, you can end up losing money and your reputation can suffer.

Since 2016, the business world has witnessed numerous large security breaches across well-known companies including Tesco Bank, Target, Facebook, Yahoo, and LinkedIn. The security breaches hurt these big businesses in the form of fines and lost customer trust. However, the breaches were not deep or widespread enough to the extent that it could cripple the companies.

For small businesses, however, data breaches can be devastating and difficult to recover from.

Here are the potential impacts that data breaches can have on your company:

Regulatory Fines

Depending on the type of data breach your firm experiences, you may be slapped with fines by regulatory bodies. For example, companies that handle customer financial information are required to be PCI-compliant. Non-compliance can lead to fines ranging from thousands to hundreds of thousands of dollars.

Governments all over the world are also proposing tougher privacy rules. For example, the European Parliament has proposed a fine of 20 million euros to businesses that suffer privacy breaches.

Financial Losses

Monetary losses are usually a direct impact of data breaches. When your firm suffers a cyberattack, you may have to temporarily stop operations as you try to address the breach. If the attack involves the core infrastructure of your business, operations may cease immediately, and this will result in lost revenue.

You may lose significant time and money as you try to detect the source of the breach and then patch it. However, as you are looking for a solution for the breach, customers cannot wait. They may have to look elsewhere for the services or products you offer.

Reduced Competitive Ability

Most of the time, data hacks are carried out by attackers looking for a business’ proprietary information, including trade secrets, pricing strategies, and customer lists. When this data falls into the wrong hands, it can damage your company almost immediately.

For example, cybercriminals can sell the information to your rivals or post it in public forums. When competitors know your trade secrets and pricing strategies, it will be difficult for you to maintain the competitive advantage you may have previously enjoyed.

Reputational Damage

A good reputation builds customer loyalty and plays a critical role in the long-term success of a company. The integrity of your brand is molded not only by how you relate to customers and the services you provide, but also how well you secure their data. A simple data breach can put your firm’s reputation at stake.

According to a report by IBM, 46 percent of companies reported a diminished reputation among customers due to data breaches. Today, news of data breaches travels fast. Therefore, it’s prudent to have a contingency plan in place for handling data breaches and how to communicate with affected customers.

Loss of Customer Trust

Clients trust your business to keep their sensitive information safe. When your firm suffers a data breach, customers will question the amount of trust they have in your business. Moreover, when your firm fails to act fast to mitigate the attack competently, customer trust will diminish.

It is critical to have robust security measures that will protect customer data. In case of a cyberattack, you should implement emergency mitigation measures and be transparent with the affected customers. It is important for customers to know that you have the systems in place to secure their information.


Big firms, like banks, know they carry sensitive data and, therefore, put stronger defensive measures in place. On the other hand, the cyber defenses of small businesses are typically less sophisticated and, therefore, easier to penetrate.

Apart from leaving your business with monetary losses, attackers can sell your data on the dark web for huge sums. When in the hands of hackers, customer data, R&D data, and intellectual property can be equally damaging.

Even the most resilient businesses can suffer devastating cyberattacks. Therefore, it is important to set up security policies that encourage proper handling, transfer, and storage of sensitive data in your company. Having an effective cybersecurity incident response plan will ensure there is little downtime, reputational damage, or financial loss for your organization in case of a data breach.

To prevent falling victim to a security breach we recommend you investigate security frameworks like NIST that help mitigate or prevent known and emerging threats, in order to avoid crippling your business and help ensure its longevity and competitiveness.

Ken Lynch

Ken is an enterprise software startup veteran, who has always been fascinated about what drives workers to work and how to make work more engaging. He has propelled Reciprocity's success with this mission-based goal of engaging employees with the governance, risk, and compliance goals of their company in order to create more socially minded corporate citizens. You can learn more about Ken’s organization and the work they do at