10 Devastating Effects Of Security Breaches


12 minutes reading

Cybercrime is, without a doubt, the biggest concern for any organization that operates online and stores its data on a cloud. Indeed, one in five internet users was affected by data breaches. According to IBM’s Data Breach Report for 2023, the average cost of a data breach reached 4.45 million dollars last year. The worrying thing, however, is that these losses have been rising for the past three years. Moreover, the trend doesn’t seem to reverse anytime soon.

Worst of all, attackers themselves report about 67% of data breaches, meaning the company itself has failed not only to prevent but also to identify the breach. This is quite troublesome as unidentified breaches cost one million dollars more on average than internally discovered hacks.

Knowing this, it’s hardly a surprise that over 51% of organizations plan to increase their spending on cyber security. This is not just here in the US. All over the World, industries, agencies, and entire governments are increasing their budgets to battle the cyber threat. And so should you.

Now, investing in your cyber security may seem a bit over the top, especially for a small brand with limited exposure online. However, regardless of your business volume, you can still find yourself in deep ватерс if you become a victim of a cyber attack. Something more, such an attack can have a devastating effect on your entire business. In fact, here are 10 ways a cyber attack can ruin your business.

1. Financial Loss

First and foremost, there is the financial blow. Regardless of how big your company is, you will have to face some significant financial sanctions if you allow malicious actors to steal your data. As mentioned, companies would pay 4.45 million on average for a single data breach. That may sound wild for your small business, and true, you may be way below that average. Still, you will pay a significant portion of your annual budget to deal with the mess. You must pay forensic investigators, legal fees, and customer notification expenses.

Looking at financial stats with regret

Of course, that’s the small damage. The bigger hit will come from your business disruption, loss of clients, credibility, authority, and troubles across your entire sales chain.

On top of it all, if you are on the stock market, you will lose a significant amount in stock pricing. Publicly traded companies will see their shares values plummet by 7.5% on average after the first data breach.

The more troublesome stats, however, show that, on average, a breached company would take 46 days to recover. This is a lot of lost time, money, and opportunities.

The worst part is that this breach can spread through the supply chain, causing a 26-times bigger loss for the entire business ecosystem. Unfortunately, your company will be liable for any further losses, and even if your expensive lawyers can prove you had nothing to do with this massive blow, you will still lose connections, suppliers, and a lot of money.

Preventing a cyber threat should be your top priority. The cost of prevention will always be far less than the financial, reputational, and legal battles that follow a data breach. Remember, the effects of a cyber attack can linger long after the initial breach, potentially threatening the very existence of your business.

2. Lost Business Opportunities

Due to the disruption in business and the reputation blow from the cyber attack, you will undoubtedly lose some lucrative opportunities while trying to recover. After a successful cyberattack, IBM reports that a business will lose 1.52 million dollars in lost deals on average. Once again, you may be at the lower end of this statistic. But can you really afford to lose opportunities, especially in the early stages of your business?

Unfortunately, you don’t even have to be the victim of a data breach to feel this devastating effect.


For example, imagine being an app developer on the verge of signing a deal with a massive company – an industry leader in their field. The association alone will be a marketing goldmine. Furthermore, the contract will cover your entire year’s expenses and more. The benefits are immense. Unfortunately, right before you sign, the company announces that hackers have managed to steal their data. The reputational blow is significant, the stock market crumbles, and while you are definitely not in any way affected directly, you are still a victim.

On the one hand, the company may decide to postpone your project, as they must first deal with the significant financial and reputational damage. Moreover, even if they are still on for the project, are you sure you want to risk associating yourself and your applications with them? What would other clients think? Will they trust your app when a compromised company is using it? Suddenly, you become guilty without any guilt. You feel the downsides and the lost opportunities despite having nothing to do with this particular cyber attack.

So, imagine you are running a small business and getting a data breach; how would others react, and how many opportunities will you lose?

3. Excessive Downtime

Downtime is fundamentally bad for your business. It significantly increases the bounce rate, undermines your SEO efforts, and chases away customers. In fact, up to 67% of customers will entirely forsake your business if they experience downtime at the wrong moment. That’s why the cyber attack-induced downtime is so devastating.

Usually, after a cyber attack, some main systems must be disabled. Naturally, this will lead to your website going offline. Still, it’s far more important for your team to assess the situation, minimize the data breach volume, and ensure malicious software and hackers within the system are no longer effective.

IT specialist working on a server

Moreover, the IT team must clean up all viruses and malware, diagnose the damage, reboot the infected systems, and restore data from the backups if anything is lost. It may sound easy on paper, but this complex task requires time. On average, your business will experience 18.71 days of downtime over the following year. This will cause additional disruptions, serious client and credibility loss, as well as major financial drawbacks.

Naturally, all of this downtime will cost you a lot of money and stress. So, investing in a robust security system, though more expensive at first consideration, will pay off over time.

4. Credibility Loss

This devastating effect of cyber attacks is hardly a surprise. We often hear on the news about companies whose data was stolen. So, if we were considering becoming their customers, we would definitely reconsider. We don’t want a partner who is not going to protect our crucial information. This is especially true for retailers, as they collect more than our emails. They have access to our financial details, addresses, and sometimes other important information.

So, if you become a victim of a cyber attack, your customers will feel the same way. No one likes the uncertainty of a criminal being in possession of their personal data, be it an email or a phone number.


Now, you may be tempted to just stay quiet or downplay the attack. Don’t do that. If you are going to conduct some sort of crisis PR, find a professional who can help you with that. Denying, downplaying, or simply refusing to give any information will instantly bury your company. People genuinely hate when a company tries to weasel out of a problem and lacks transparency.

The best way to save face in this moment of crisis is to be transparent, honest, and apologetic. Constantly assure people you understand the severity of the problem, but everything is under control. This is the only way you will have even a slight chance of restoring your credibility in front of customers, stakeholders, and partners.

5. Legal Problems

Along with the massive financial troubles, companies that fall victim to cyber-attacks are also prone to extensive legal issues. As a data collector, you have obligations to protect the collected data to the best of your abilities. So, when you allow a data breach, regulators will instantly put you under the microscope. If your security system is not impeccable, you can face severe fines and even worse. For example, according to their General Data Protection Regulation (GDPR), the European Union fined Facebook owner Meta 1.2 billion Euros ( 1.3 billion USD).  Indeed, if you are working in the European market, GDPR is not something you want to neglect. The fines can reach up to 4% of your annual global turnover (Maximum 20 million Euro). This fine, however, can be issued on each violation.

GDPR illustration

While the United States still lacks a federal data protection law, many states have issued their own legislation on the matter. The California Consumers Privacy Act is perhaps the most notable one. According to the CCPA, you can be fined up to $700 per stolen customer’s data, depending on the nature of the lost information.

Still, these fines and legal battles are just the tip of the iceberg. In some cases, affected customers may file lawsuits against you, alleging negligence in protecting their data. These lawsuits can be costly to defend, even if you prove your innocence. Still, to be able to prove your innocence, you need to have invested in your security. Being blissfully unaware is no excuse when you deal with other people’s sensitive personal data.

So, to avoid this devastating blow to your business, invest in proper security measures. Also, lawyers insist that you promptly notify affected individuals about a data breach. Failing to do so can lead to additional fines and lawsuits.

6. Losing Competitive Advantage

You are still not out of the shadows if you survive the legal battles. Data breaches can cost you significant competitive advantages over other industry players. Stolen data may lead to leaks of intellectual property, know-how, and other crucial documents that give you a lead over the rest. Naturally, this will be a devastating blow to your brand.

Competition illustration

Moreover, many disappointed customers and partners will seek your competitor’s services, leading to significant market share losses. Unfortunately, such blows can be irreversible, especially if the competitor manages to capitalize on your ill fortune.

If you lose your advantage and unique customer sales proposition, consider your business over. That’s why most companies prefer to keep their most essential documentation offline, on separate machines, or even on paper. Sure, that makes it significantly harder to share, but the devastating effects of having it leaked are way too serious to simply ignore.

7. Losing Customers

With the downtime, operational disruptions, and fragile credibility, naturally, customers will begin to subside. This would come due to several factors. Mostly, the concern for their personal data will drive them to competitors. Your credibility will suffer the most and will be the hardest to restore. Still, with diverting resources to revitalize your brand, business owners often start neglecting customer service, which erodes trust and loyalty even further.

Online customers

However, the biggest culprit behind losing customers is the initial panic reaction. About 60% of organizations that suffered a data breach increased their prices. Along with the fragile trust of partners and customers, this is a recipe for disaster. Unsurprisingly, 80% of customers in developed countries will never set foot on a business website if the company allows malicious actors to steal their personal data. Additionally, 66% of customers would never trust a business that became famous after a data breach.

So, the only way to retain a steady increase in your customer base is to ensure that their personal data is well protected.

8. Endangering Supply Chains

Customers are not the only ones who will start turning their backs. More often than not, suppliers and other partners start to consider you a weak point in their business ecosystem. Naturally, they try to expel you as soon as they can.

Some companies even add a clause that allows them to terminate a contract if you experience a data breach. This may sound harsh, but your security negligence affects their customers and their business as well.


As already explained, you don’t have to be the direct victim of a cyber attack to bear negative consequences. Your partner’s other contacts, customers, and suppliers can lose trust in them just because they have connections with you. After all, a cyber attack that spreads through the business ecosystem can cause 26 times more significant losses. This is a risk no owner is willing to take. Especially if they have options.

So, with the lost customers, advantages, and suppliers, you don’t really expect huge profits at the end of the year. In fact, the situation is more dire than you imagine.

9. Lost Sales And Profits

As you can imagine, after all this turmoil, sales won’t be booming. Neither will your profits. Actually, there will hardly be any profits. Usually, companies that experience successful cyber attacks end the year with a huge loss. 38% experience a loss of more than 20% of their revenue. For a young business, this could spell bankruptcy.

Factoring in all the financial burdens associated with a data breach, companies often face significant financial strain for years. Some never fully recover from the blow.

So, it’s hardly a surprise that many companies simply cease to exist after a data breach. This is the worst-case scenario, indeed, but it’s quite feasible.

10. Losing Your Entire Business

Yes, this is something no one really wants to talk about. Still, when we talk about cyber attack consequences, this happens way too often. In fact, 60% of small companies close within six months of being targeted by a successful data breach.

This is hardly surprising, given the financial strains, lost credibility, fragile supply chains, and dwindling sales. Most business owners prefer to salvage what’s left and either start anew or just return to their regular 9-to-5 jobs, away from the responsibilities of harboring other people’s data.

Bankruptcy documents

Unfortunately, this is not an extreme scenario but rather the norm. Large businesses will survive. They have the resources, loyalty, and influence to guarantee their staying afloat. A start-up or a family business will most likely die out, as the fines and legal battles will drain their entire capital, making them a huge loss to the investors.

This is the harsh truth.

Still, while there are 4000 cyber attacks daily, most are unsuccessful. In fact, most are carried out by amateur hackers who try their luck with ill-prepared business owners.

So, all you have to do is some basic prevention.

The Key Word Is Prevention

Indeed, cyber threats are the bane of the otherwise blissful online business. However, some easy and relatively inexpensive prevention techniques can prevent most cyber threats.

First and foremost, you must always keep your software and operating system up to date. This includes WordPress and essential plugins. These updates often include patches that fix vulnerabilities.

Furthermore, implement a robust firewall and anti-virus and anti-malware programs. Use only reputable brands with a proven record of catching malicious attacks.

Also, make sure to implement multi-factor authentication when accessing crucial data. This method will ensure that only those who were supposed to have access can reach it.

A MFA does not substitute for a robust password. Make sure to add capital letters, small letters, random numbers, and special symbols. Qwerty and 123456 are definitely not secure or viable options.

Finally, it operates only on secure networks without coffee shop Wi-Fi. If you need to work from a hotel, use a VPN to encrypt your traffic.

Finally, make sure to educate your staff on how to recognize scams as they come. Ensure your employees will instantly flag suspicious emails and will never fall for a phishing scheme.

Where to start?

Although all of this may sound a bit overwhelming, protection is mostly done at the server level. Thus, you need a highly secure hosting provider who will protect your servers and ensure that all your data is untouchable.

We at HostAramada pride ourselves on our impenetrable security. We offer free SSL, backups, DOS and DDoS protection, malware scanning and removal, and a robust network firewall. Check out all our security features, and don’t waste time wondering if we will improve your website. We will. Not only security-wise. Our state-of-the-art infrastructure will increase your website loading time and ensure your pages will be visible 99.9% of the time.

So, check out our plans and make your website faster, more reliable, and, most importantly, better secured. Remember, prevention starts at the foundation of your website. Protection starts with HostArmada.