Most of us wouldn’t dream of driving around in a Ferrari without full-coverage auto insurance, or living in a million-dollar home without homeowner’s insurance. After all, it’s human nature to protect our most valuable assets from theft or accidents. Yet many business owners aren’t protecting their livelihood against the devastating consequences of poor network security – and this can be a costly mistake.
How costly? That can depend upon the type of attack your organization endures, and the amount of damage done to your equipment and network. It’s hard to estimate the exact cost of a security breach, because it affects your business on every level, from operating costs, to the price of your business’s reputation, to possible settlements of lawsuits.
Consider, for example, the bottom line of operating costs alone. Once you suffer a data breach, you could end up spending a large amount of money fixing the problem – from software improvements to employee hours. The amount of money you spend correcting the problem may already outstrip what it would have cost to prevent it in the first place. It’s important to consider the cost of lost revenue while your system is down, as well as the cost of lost productivity while computers are malfunctioning. Customers whose sensitive information may have been stolen must be contacted, which can cost an inordinate amount of both time and money.
Then there is the price of your business’s reputation, and it’s probably impossible to attach an exact figure to that. The negative publicity usually far outlasts the actual event itself. Aside from losing loyal longtime customers, being notorious for putting customer information at risk can drive away potential new customers in droves.
What can be calculated, however, is the average cost of lawsuit settlements after network security is compromised. A NetDiligence study, published in 2012, found that the average legal settlement per event amounted to $2,100,000. The average cost of legal defense, per episode, was $582,000. The average insurance payout costs amounted to $3,700,000. These, of course, are legal costs only; added on top of lost revenue, productivity, and reputation, the results could be devastating for your business.
The bottom line is that network attacks are costly and time-consuming to repair, and can carry catastrophic effects for your business. Considering the cost of an attack versus the relatively lost cost of prevention, it is easy to see how investing in network security serves as vital insurance for the future of your business.