The costs of poor data security come in many forms and have the potential to bankrupt businesses. Organizations that cut corners on cybersecurity measures due to budget concerns should keep all of these expenses in mind before making that decision. Data loss and leaks may go far beyond the costs involved in implementing and maintaining robust data protection strategies.

Table of Contents:

  1. Disaster Recovery
  2. Data Loss
  3. Fines
  4. Ransomware Fees
  5. Cybersecurity Audits
  6. Unexpected Downtime
  7. Reactive Security Measures
  8. Reputation Damage
  9. Stock Price Drops
  10. Lawsuits

Disaster Recovery

Your first costs come in the immediate aftermath of the security incident. Depending on the disaster recovery plan in place, you may need to bring in additional IT staff at short notice. In-house workers work long hours to get systems back to normal after large-scale security incidents, with the associated overtime wages for hourly employees. Getting cybersecurity specialists from staffing agencies may be more expensive than normal, due to the time-sensitive nature of the schedule.

Workers who have to work long stretches to resolve these data security problems may experience burnout from stress and pressure. Productivity may drop or you could have high turnover rates. Sourcing new IT staff and training them during a disaster adds another layer of complexity.

Data Loss

How much data did you lose due to poor security practices, and how hard is it to recover or recreate? If the loss is extensive enough, you could be looking at months or even years of work lost. Trying to redo these efforts may be logistically impossible, or disrupt current projects for employees. The opportunity cost of data loss also has a bottom-line impact, especially when customer or prospect files are affected.


Fines associated with data security incidents may represent a significant portion of your organization’s resources. Depending on the type of data affected, whether it was exposed in a usable form, and your industry, you could be responsible for thousands or millions of dollars in fines. Other regulatory consequences can include losing licenses to do business, facing Congressional hearings, or even being targeted with criminal charges.

For example, the CSO of Uber was recently criminally charged for allegedly covering up a massive data breach by paying off the hackers. He was also fired from his position. The New York and Presbyterian Hospital is another organization suffering major consequences from a data breach. They had to pay $4.8 million in HIPAA compliance fines after they exposed 6,800 patient records on Google.

If your business is already suffering from cash flow problems caused by cybersecurity problems, then fines may lead to a restructuring or closing of the organization.

Related Reading: The 9 Worst Security Breaches

Ransomware Fees

If ransomware makes its way onto your systems, you’re faced with a tough choice: do you give in to the hacker’s demands? The FBI advises against paying the ransom, as it encourages ransomware authors to continue targeting companies. You also have no guarantee that your data actually still exists. You could end up paying a substantial fee and be left with nothing to show for it. Many of the hackers also ask for Bitcoin payment, which requires your company to jump through a few hoops to acquire it from an exchange.

Cybersecurity Audits

You don’t want a hacker using the same vulnerability to hit your systems over and over again, so a cybersecurity audit is necessary to find out what happened in the incident. The size and complexity of your infrastructure impacts how much you will pay for a complete audit.

Unexpected Downtime

Did you lose access to key databases and applications because of bad security? How long did it take until users could get back to what they were doing before the incident? You have many types of costs under this category, including how much revenue you lose with every minute of downtime, and whether users have alternative ways to fulfill their job duties, access the data, or use the system.

Reactive Security Measures

A purely reactive data security strategy still leaves you one step behind threats. You also don’t have the time to fully compare security solutions if you’re putting them in place on an emergency basis. Your negotiating power is also diminished, as you don’t have the ability to go back and forth on a contract.

Reputation Damage

Customers, vendors, suppliers, employees, and others who do business with your organization may have a less favorable view of you following security incidents that affect them. You encounter the most damage in this category when you have a data breach that includes sensitive data. Your reputation management strategy needs to include ways to gain back the trust that you lost in these situations.

Stock Price Drops

Publicly traded companies see their stock prices drop after a data breach, as well as other security problems. The problems go beyond the immediate drop following a breach disclosure. The stock price can be impacted on a long-term basis as well.


Lawsuits relating to poor security practices may be from individuals and businesses, as well as class-actions. Data breaches that cause damages, such as leading to someone getting their identity stolen, are costly from a legal standpoint. You may have to allocate resources for several lawsuits or deal with large-scale, high-profile ones that add to your reputation damage. Settlements can also damage your organization. Look at Equifax's massive $575 million settlement following its data breach.

Improve Your Data Security Today

Poor data security has no place in the modern business world. New threats and vulnerabilities impact organizations of all sizes and industries, and data breaches are an everyday occurrence. Putting strong security measures in place lowers the direct and indirect expenses associated with incidents, and ends up saving money in the long-term. You can start by looking at your data integration tools and whether they offer secure connections from end-to-end. Schedule a time to demo for seven days to evaluate a data integration platform that has data security in mind.