Financial Impact of a Cyberattack

Financial Impact of Cyberattacks | Cybersecurity

Quantifying the Financial Impact of a Cyberattack on SMEs – Cybersecurity

By now, most business owners who read our articles will be familiar with the financial impact that a Ransomware attack can have – and the amount of money that companies have had to pay cybercriminals to get their data back is just the tip of the iceberg.

The true cost of an online attack can be far more than the ransom demanded by hackers.

When factors like downtime, data recovery, forensics, system restoration, and potential fines from the Information Regulator are taken into account, falling prey to a cyberattack could cost your business hundreds of thousands or even millions of Rands.

In this article, we explore the financial impact of a cyberattack and provide some tips and tools for business owners to calculate the true cost.

Cyberattacks: what’s the damage?

Understanding the financial impact of a cyberattack is far easier when we consider the various costs that are involved in recovering from a crime like this.

A report from the Ponemon Instutite determined that of the 5 most vulnerable industries that experience data breaches – healthcare, financial, pharmaceutical, energy and industrial, the average cost of a breach in the healthcare industry exceeds $10,93 million (over R19 million).

In general, the cost of a cyberattack consists of the following factors:

  • Detection and client notification costs
  • Data recovery costs
  • Network restoration costs
  • The legacy costs of reputational damage and possible financial claims
  • Regulatory compliance fines

In the wake of a cyberattack or data breach, your business will need to jump into action.

In addition to having a cyberattack response plan so that your efforts remain calm and effective, you’ll need to quickly alert clients and anyone else whose data has been compromised and undertake the process of data recovery.

The POPI Act requires businesses to be good custodians of their clients’ data and take all possible steps to protect it before, during, and after a cybersecurity incident.

  • Failure to do so could result in heavy fines (capped at R10 million) or even prosecution.
  • Special insurance may be necessary for companies that handle vast amounts of client data should the incident be investigated by the Information Regulator.

In addition to compliance costs, expenses related to the restoration of your network can range from four to six figures depending on the size and scope of the damage.

  • Downtime following a cyberattack can cost your business a fortune in lost revenues and undeliverable products and services. A larger SMB or corporation may face millions of Rands in wasted productivity while its systems are down.

According to a 2023 study of hundreds of organisations, the average cost of recovery per file could amount to R2 750, which is an 8% increase from 2022. The costly consequence of a data breach can be determined by taking all of the above factors into consideration or by using one of the many “cost calculators” such as Arctic Wolf to estimate the cost to your company.

A major cyberattack could cost millions in total, but for a small monthly investment in secure cloud storage you can keep your data safe, updated, and encrypted.

Soteria’s range of cloud storage packages is the place to look if you’re serious about data security. To learn more, browse our product page or contact our team today.