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Seven Major Consequences of Data Breach That You Should Be Aware Of

Sep 1, 2022 | Cybersecurity

When operating your business, it’s critical to take the proper security measures regarding data protection. The consequences of a data breach can be severe and long-lasting. However, maintaining excellent security measures can help you avoid data breaches and subsequent data breach consequences.

Government agencies, credit card companies, small businesses, larger companies in the healthcare industry, and financial institutions often find themselves the targets of hackers, resulting in a data leak. Company executives must follow proper business practices and ensure their cyber security is at its strongest to prevent this sensitive information such as medical records, bank account numbers, and more from leaking.

Working with a Bay Area cybersecurity firm can help prevent online vandalism, build customer trust, and thwart threat actors to reduce risk. Here’s an explanation of what data breaches are and the consequences they cause.

What Is a Data Breach?

A data breach occurs when individuals gain access to private, sensitive data they don’t have permission to access. This data includes:

  • Intellectual property
  • Personal information
  • Customer data
  • IT security information
  • Financial information
  • Birth dates
  • Email accounts
  • Trade secrets
  • Other confidential information that requires significant data privacy

Individuals may steal information and sell it on the dark web or use protected data to commit identity theft.

High-profile data breaches have resulted in breaking news and changes to personal information protection policies worldwide, such as with the European Union General Data Protection Regulation. In America, The Federal Trade Commission protects potential customers from harmful information breaches.

Consequences of Data Breaches

There are many financial impacts when facing the consequences of a data breach and compromised data. These can be direct or indirect, but both affect your business significantly. Directly, you may incur financial costs and a damaged brand reputation. Breaches lead to circumstances that indirectly result in revenue loss and class-action lawsuits. Others include:

1. Data Hardening Costs
Data hardening costs are the first direct consequences you’ll face. After a data breach, the immediate step is to perform upgrades. The average cost of improving your business’s IT and data security increases with additional data loss.

Data hardening requires that IT security teams analyze potential improvements using a data management system. They look for security issues and resolve them quickly and efficiently. Depending on the type of damage control you implement, you could either save on system upgrades or significantly increase your spending.

2. Reputational Damage
A company’s reputation suffers significant damage after a data breach. Information leaks are high on customers’ concern lists. Many are likely to avoid purchasing products from a company’s website after a data breach, fearing that their personally identifiable information will not be secure.

Security concerns have become a higher priority for consumers as technology’s capabilities increase. Lowered confidence in your company can push existing customers away and keep new customers from your business.

3. Fines and Legal Fees
One of the most common consequences of a data breach is fines and legal fees. Avoiding fines may be possible for companies that can prove compliance despite a security breach. In worse cases, however, your company could owe millions of dollars.

Regulatory agencies may also add additional fines depending on company compliance. There are many regulations in place to ensure that companies can avoid an unfortunate cyber incident, but when a company fails to follow these rules, legal penalties can mount quickly. Cyber safety is enmeshed in every aspect of today’s society, so multiple government agencies can seek fees.

4. Potential Lawsuits
After a data breach, hackers may sell or market customers’ confidential details, use credit card information, and commit identity theft. Sensitive information and stolen data can result in lawsuits, although rare. Customers wanting compensation after experiencing the harmful effects of such theft have a right to receive payment.

Depending on the breach’s severity, it could cost millions of dollars between legal costs, customer compensation costs, and current business expenses. While major multinational corporations may be able to weather that storm and remain intact, smaller businesses may not be so lucky. It’s best to invest in data security before a breach happens so that you’ve covered your bases if one does occur.

5. Compensation for Damages
Damage compensation is one of the most impactful consequences of a data breach. Customers must receive adequate payment for your business’s mishandling of their sensitive details. In

such cases, courts may order your business to pay customers compensatory and punitive damages for lost finances and equitable relief. While the amount to each individual customer may be minor, paying the hundreds or thousands whose data hackers stole can be expensive.

6. Lost Revenue and Customers
Customers want to do business with a trustworthy company. Unfortunately, data breaches encourage them to be cautious and select a different company. The decreased reputation and negative financial impact after an information leak often lead to revenue losses and fewer returning customers.

Studies have indicated that companies could lose up to $5,000,000 in the two years after a data leak from significant customer loss and reputational damage.

7. Operational Disruption
After suffering cyber threats and a data leak, your company may suffer business operation disruption. Officials may direct your business to stop all operations until there are adequate security measures.

Making proper security changes can take months. Ceasing business operations results in decreased income and other inconveniences. If your business struggles to demonstrate compliance, you can garner more fees in addition to an order to stop operations.

Contact Us to Improve Data Security and Avoid Identity Theft

A data breach is an easily avoidable security issue, no matter your business’s size. With help from the team at Renascence IT Consulting in Newark, CA, you can maintain top-notch IT and data security for your business, employees, customers, and more. We have leading solutions and years of expertise in reducing security risks successfully.

Want to know more about our cloud-based solutions or need help with upcoming events? Ask us about the consequences of a data breach, and let us explain how we can help. Contact Renascence IT Consulting in Newark, CA, at (510) 552-6896.

Our History


With over 20 years of industry experience under his belt, the company's CEO possesses a degree in Computer Science and a number of certifications, including MCSE, MCSA, A+ and Network+. From an early age, computers were always a part of his life; dating back to the days of the Apple II. Since that time, he served as everything from system administrator to IT business director within well-established companies, before deciding that consulting was his passion. Leveraging years of technical recruiting, he personally handpicked a select group of specialists proficient in Linux, customized web applications and databases, telephony and cross-platform devices, to ultimately bring your organization to the next level.