Skip to main content

Cyber-attack fallout: the knock-on effects a business can suffer

man using a laptop late at night
(Image credit: Getty)

2021 was another bumper year for cyber attacks on businesses and the worrying trend shows no sign of slowing down anytime soon, with Cybersecurity Ventures predicting that cybercrimes will cost companies worldwide an estimated annual $10.5 trillion by 2025

Despite all the warning signs, many companies are still underprepared for a cyber attack, with the DCMS Cyber Security Breaches Survey for 2021 reporting that the number of businesses deploying security monitoring tools has dropped, (35% in 2021 compared to 40% in 2020), and that less businesses are undertaking user monitoring (32% in 2021 compared to 38% in 2020). 

Essentially, businesses as a whole are less aware of the security breaches their employees and services face, despite the ever-growing threat.

Related: Protect your business from cyber attacks with the best antivirus software.

For a company, a cyber attack is not just a loss of data, it can also have everlasting effects on the operations, and affect its standing for years to come. Here are some of the knock-on effects a business may suffer from if they face a cyber attack.

Service disruption

spar shop front

A cyber attack on UK retailer Spar lead to the closure of stores. (Image credit: Spar (UK) Ltd.)

One way a cyber attack may affect your business is by halting your services, which can potentially result in a loss of productivity across your entire organization, and can cause ripples within the real world. 

We recently saw this with the ransomware attack on James Hall and Company, who provide wholesale and IT services to the UK retailer, Spar. The resulting attack led to card machines in 600 stores being shut down, and even led to some stores being forced to close.

Businesses should also be aware that they could potentially fall victim to a Distributed Denial of Service (DDoS) attack, in which bots are sent to spam a network with high traffic until it is unable to handle legitimate customer and user requests.

This disruption can prevent customers from reaching your website, and, in some cases, can block new traffic from flowing in, and divert potential clients away.

Reputational damage

As a business, it is essential that above all, you have your clients' trust. Consumers will struggle to do business with an organization that has failed to protect their data, and this fallout can lead to both current customers and future prospects looking elsewhere.

google search on a laptop

If a breach is particularly damaging, and is reported by the press, your search engine rankings are likely to be affected (Image credit: Photo by Firmbee.com from Pexels)

A survey from PwC found that 87% of consumers are willing to walk away and take their business elsewhere if a data breach occurs. If your organization is not entrusted with a customer’s data, then it is very likely that your business will struggle comparatively to a business that is able to manage their cyber security situation. 

Even once the situation has been resolved, the backlash can continue to have ramifications on the reputation of your business, with negative social media comments and reviews potentially becoming a regular occurrence. 

If the breach to your business is particularly damaging and is reported by the press, then your search engine rankings are also likely to be affected, as news networks have a higher authority in SERPS (Search Engine Results Pages). 

This means that anyone searching for your company’s name on Google will be presented with damaging stories of data attacks, and will be less likely to proceed with choosing your service. Businesses should be conscious that cyber attacks have the possibility to erode user relationships to the point of no return.

Financial loss

While businesses may be aware that there will be some financial consequences of a cyber attack, they may not fully understand the potential scale of the costs the damages could lead to.

When data is targeted, it is very likely that the full breadth of your IT team will have to be implemented in the response and recovery stage of a cyber attack. Depending on the size of your organization, the increase in work demands can prove costly, as you may have to increase expenses for any additional man hours. Once data has been recovered, there is also the cost of investigation to account for, which increases further if external auditors or consultants are contracted.

As mentioned, a cyber attack can lead to indefinite service downtime across the board. Customers being unable to proceed with purchases is damaging enough to finances, but there is also a chance that employees will not be able to access systems, and in turn, be unable to bring in revenue.

If the cyber attack is severe enough to cause substantial damage, then there is even the possibility a business can suffer from a decrease in their company valuation. If your reputation suffers greatly from an attack, it can lead to discouraging financial forecasts.

eu gdpr graphic

GDPR gives the EU the power to administer fines up to €20 million or 4% of a firm’s global annual revenue. (Image credit: Getty)

Privacy laws and data protection acts require that your business ensures the security of any personal data handled within your company, whether that is staff or client information. Should these legislations fail to be complied with, then your firm could also face fines and regulatory sanctions.

The General Data Protection Regulation (GDPR) has been in effect across the EU since 2018, which has the power to administer fines, per violation, up to €20 million or 4% of a firm’s global annual revenue from the previous financial year.

Companies who have incurred penalties in the past include Google and Whatsapp, who faced a €50 million and a €225 million fine respectively, but the largest punishment so far was handed to Amazon in 2021, who had to pay up to €746 million due to the mishandling of personal data accrued via cookies. Companies must understand that they have a legal responsibility to protect the data of their customers, or face financial penalties that could be potentially crippling for their organization.

Final thoughts

Facing cyber attacks is an inevitable part of business of all sizes, but if your organization has a thorough security strategy in place, the effects of these attacks become minimized. 

A common mistake businesses make when selecting a strategy is believing that there is a blanket solution, which can often leave areas of your organization exposed.

The weakest link in any organisation’s security chain is people, and ensuring your employees have proper training in place will go a long way into securing your operations. 

Taking the time to regularly go through cyber security protocols within your team will give your organization confidence when working with sensitive data. If operating remotely, vetting work devices, and putting security technologies in place, such as Firewalls,VPNs and AntiMalware software, helps avoid attacks that look to exploit lapses in security that fail to account for modern working demands.

Finally, having a back-up solution in place will give you peace of mind that your data is accessible should a breach happen. 

Should the worst occur, such as your business having an outage, having a disaster recovery plan in place will mean that any data you handle will remain secure throughout the downtime, and gives your organization the best chance to resume services in a timely manner.

Neville Louzado is Head of Sales at Hyve Managed Hosting.

Learn about cybersecurity best practice: 10 ways to prevent cyberattacks on your business.

Neville Louzado
Neville Louzado

As Head of Sales at Hyve Managed Hosting, Neville boasts a demonstrated history of working in the Information Technology Services industry. Skilled in sales, managed public and private clouds, VMware, data centers, and virtualization, Neville is a strong sales professional who graduated from Staffordshire University.