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Lawsuits, Extra Business Expenses, and Frustrated Customers: The Aftermath of a Data Breach

13. August 2015 08:32

frustrated woman on the phone

You don't need us to say it: data breaches are bad news for business. There are plenty of studies gauging how much each exposed record costs (e.g., Ponemon Institute's latest study says $173), but quantifying a breach's aftermath can be tricky.

For example, consider the data breach at Indiana-based company Medical Informatics Engineering (MIE). The Journal Gazette reports MIE noticed an unusual surge of network activity on May 26, 2015, and promptly shut done the affected server. That triggered a whole slew of expenses, including the cost of:

If you follow any news coverage for widespread data breaches, these costs shouldn't be much of a surprise. (Need a refresher? Check out "Target's Cyber Liability Insurance Covered 36% of Its Data Breach Costs. How Much Does Yours Cover?") But what you may not realize is just how many hidden costs accompany a breach.

Let's take a look at some lesser-known data breach costs and see how Cyber Liability Insurance can address these financial strains.

Adding Up the Data Breach Fallout

We know that MIE's breach is racking up bills for investigators, client notification, and the impending lawsuit. But here are a couple additional expenses MIE may be up against:

You may be wondering how any business can survive this avalanche of costs. In short, Cyber Liability Insurance may be MIE's saving grace. Let's review what this policy can do.

Cyber Liability Insurance to the Rescue

A robust Cyber Liability Insurance policy can help address breach response costs, including…

Some policies may also help pay for regulatory fines, but be sure to talk to your insurance agent about what your policy can and can't cover.

While your Cyber Insurance policy can help pay for good-faith advertising to repair your business's credibility after a breach, there's no guarantee spurned consumers will return. That's why it's a good idea to invest in cyber security from the outset in the hopes you can avoid the data breach spiral altogether. For some starter security tips, check out "Yes, You CAN Prevent Data Breaches."

Tags:

Cyber Risk Insurance | Data Breach | HIPAA | Risk Management | Small Business | Small Business Risk Management | Tips for All Small Businesses

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