What are the hidden costs of cybersecurity attacks? According to Deloitte’s white paper published in 2016, there are 14 impact factors. Most of these factors are quite distinct. However, cyber-attacks have a life cycle that can last for a month or a year.
The reactive phase takes a few days or weeks immediately after discovering an attack. The incident triage characterizes the period. Here, after consultation, your business resumes online.
After the reactive phase follows impact management where the internal processes are adjusted to fix how likely your business is to more security breaches, and finally the business recovery phase. The recovery phase involves reorganization of assets which aims at rebuilding trust and increasing your revenue streams.
Since most cyberattack costs are apparent, it is essential you consider automated compliance. Automated compliance will help lower the cyber-attack costs on your business. In Deloitte’s report are seven hidden costs. To minimize these costs, invest in compliance automation.
How does Compliance Lower the Hidden Costs of Cyberattacks?
Increased Insurance Premiums
Insurance companies have a hard time estimating the cyber insurance premiums for your organization. The insurer will, therefore, raise your premiums in case of a cyber-attack just like in automobile insurance.
Being somewhat a new phenomenon cyber insurance is proving difficult especially in risk estimation. Your insurer will, therefore, charge you premiums that are way above the impact of the attack. Instead of grappling with the costly premiums, take up compliance automation.
Automation offers you an easy-to-follow process in protecting your information assets. The documentation serves your insurer in determining your business’ possible threats.
Increased Cost of Lending
Cyber-attacks tend to increase your cost of lending by raising interest rates. With cyber-attacks both the government and financial Institutions suffer a significant stock drop, negatively impacting their credit ratings.
According to Standard & Poor’s, 2015, factors such as how badly cyberattack affects your organization’s competitive standing determine your credit opinions. Other factors determining this opinion comprise of; the efficacy of your response, your financial flexibility, your liquidity, and the ability to replenish your capital after the attack.
Most of the financial institutions who have suffered severe data breaches came back stronger after an attack. The persistence of cyber-attacks is something to worry about because it paints a bad picture of your firm hence scaring away consumers.
Save your credit ratings therefore by setting in place solid controls. Additionally, invest in a robust automated compliance system to avert the adverse effects of the cyber-attack. In the long run, the preparedness will improve your businesses’ financial strength.
Impact of Operational Disruption
Most often, cyberattacks lead to business closure. However, operational disruption is always unaccounted for since it’s is challenging to quantify.
Owing to this fact, Michael Bell at Risky Thinking developed a hypothetical in 2013. An established business purchased a single, unique, costly laser printing and a folding machine for postage of its monthly invoices. Since the company had loads of work, the device was to operate all day and night nonstop while being 99% occupied.
Failure of any of its parts rendered it inoperable for a week. How much time would it take for the bills’ postage to be timely? If the interest rates were 10% at the time, the critical question would be estimating the total losses while assuming the company had a million clients with an average wage bill being $100.
Technological advancement contributes to increased attacks on the printing system in the form of malware and ransomware. Increased attacks translate to more shutdowns. The impact would, therefore, be the same while the cost remains unchanged.
A corporate risk and opportunity survey took place in 2015. Of the GRC executives interviewed, 41% listed control breakdown as the leading threat to financial success. 37% mentioned the effects of business disruption while 75% of the executives listed “single version of the truth” as the most significant pointer to financial freedom.
Find your single version of the truth in automating your GRC program. The automation fosters a common language in all your departments hence improved compliance. Replace your old information storage with a central Saas GRC program which deals with control failures thus minimal disruption costs if any.
Lost Value of Customer Relationships
Every customer reveals their information with the hope that you will keep it safe even when they are not sure how you will do it. Though it is unreasonable, and breaches are also inevitable, aim at reducing the hidden costs associated with cyber-attacks. Make it your goal to rebuild your customers’ confidence immediately after the breach.
In 2008 Oracle’s whitepaper recommended you focus on rebuilding public trust by working on these areas listed by consumers;
- Transparency in your business dealings
- Minimize your products’ risks
- Make your products and services easily accessible and at a fair price
- Develop environmentally and socially conscious products and services
Despite Information security dynamism, customers’ concerns remain the same. However, design your compliance stance to prove transparency to your customers. In case of an attack, the customers will appreciate your efforts in lowering risks. Additionally, the compliance stance will revive and make better the customer confidence while at the same time minimizing one hidden cost of the breach.
Value of Lost Contract Revenue
Are you a service provider to businesses? Broken relationships will rid you of profitable contracts hence current and future losses of revenue and opportunities. Therefore, win customers trust with a strong compliance stance. The customers will be hesitant to cancel a contract immediately giving you room to prove your IT prowess and governance. Also, the automated GRC offers assurance by providing fast, reliable information upon the contract customers’ request.
Devaluation of Your Trade Name
How much would someone need to pay to use your business name? After a cyber-attack, you will record a marked decrease in the value of your trade name. However, the devalued trade name often goes unnoticed as a hidden cost of a breach.
Valuing a trade name is challenging firsthand. Otherwise, you should promptly respond to a cyber-attack. Consequently, identify the gaps in your control system and quickly mend them. The fast response is made possible by the implementation of a compliance program. Make sure to monitor and keep the program in constant check.
Loss of Intellectual Property
Hardly are hackers interested in your customer information. Instead, they aim for the valuable firm’s intellectual property. Applying a strong compliance stance will, therefore, aid in easy detection of any intrusion.
All the departments and employees should, therefore, work as a unit to help identify any breach attempts. A communication gap between corporate and info security will work to your detriment.
Using an automated GRC device, you will quickly notice and track any records of attempted cyber-attack as well as what was the manipulated weakness.
The Hard Reality
Cyberattack is a hard reality, and sadly, there is not an end at sight. Your business strengths also pose as a potential loophole for breaches. The solution to decreasing the hidden costs of a breach exists in investing and implementation of an automated compliance system.
You can learn more about risk assessment and continuous monitoring at ReciprocityLabs.com.
