What Happens When Your Store Is the Victim of a Data Breach?
What Happens on the Business Side of Things?
A data breach is many things — it's a loss of trust, a PR nightmare, and a huge, unplanned expense. For retailers, a breach means that you have legal and professional obligations to repair your technology and protect your customers' data. This can have a huge impact on your budget.
Breaches can affect your bottom line in two ways:
- Direct costs for repairs, response, and other expenses that come with the breach
- Indirect costs and lost revenue as a result of damage to your business's reputation
How Much Will a Data Breach Cost a Retailer?
In the previous section, we looked at the Lifecycle of a Data Breach for Small Retailers, but we didn't actually talk about costs. In addition to the direct costs we discussed in the previous section, your business will be affected in other, indirect ways, including:
- Lost revenue from slow sales.
- Lost customer trust.
- Increased advertising and PR costs as you seek to rebuild your reputation.
- Profit loss from discounts and free services offer to your customers.
In other words, data breaches hurt your ability to make money by damaging your reputation, while also presenting new bills for IT repairs, crisis management advice, and upgrades.
The Ponemon Institute's Cost of a Data Breach Study estimates that retailers should expect to pay $105 for each customer record compromised in a data breach. If you breach involves data for 100 customers, it might cost $10,000. For 1,000 customers, you could be looking at a six-figure bill.
Financial Security for Retailers
Cyber Liability Insurance offers two main benefits for retailers: cost certainty and guidance. Was your head spinning while we went over your legal obligations after a data breach? Would you have any idea how to find a data leak if you're hacked? Cyber Liability Insurance policies can help fund the IT forensic investigation, data monitoring, and customer notification often required after a breach.
Cyber Liability Insurance typically covers…
- Crisis management teams.
- Credit monitoring for your customers.
- Data breach notification costs.
- IT investigations.
- PR assistance.
By connecting you with security and PR professionals, Data Breach Insurance can help ensure you don't botch your data breach response. Given how quickly data breach costs add up at $105 per record, having insurance in place may offer you some protection for the financial risk that comes with cyber crime.
$105 = cost of each customer record compromised in a data breach
Next: Data Breach Prevention for Small Retailers