A data breach occurs when information stored on a virtual network becomes accessible to unauthorized persons. During a data breach, stored information is often viewed, edited, or taken without authorization, and this can have major negative impacts on a company. 

Information that is stored on either physical or cloud servers may be susceptible to data breaches, which tend to occur more often when insufficient or outdated cybersecurity systems are monitoring the servers. 

Data is often breached when a hacker uses viruses, spyware, ransomware, or other forms of malware to infiltrate a system. Data breaches also give hackers more opportunities to introduce new forms of malware to networks to gain further control of systems and access more sensitive information. Today’s top cybersecurity systems are designed to help thwart the efforts of hackers and malware and often work well in preventing data breaches, but even the best systems are not always enough to stop cyberattacks. 

Not all data breaches are caused by hacker activity. Dishonest employees who have access to sensitive data may leak the information or alter it for unscrupulous purposes. A data breach can also happen unintentionally if an employee or another authorized person accidentally mishandles the data and makes it accessible to unauthorized parties. Technology glitches are responsible for some data breaches, although these occurrences are generally rare.

Financial Impacts

Criminals who access data without authorization often do so with the intention of stealing money or other important financial details. Data breaches often provide opportunities for cybercriminals to steal customers’ credit card numbers and other financial details stored on a business’s network. If this happens, the business may be responsible for reimbursing customers for their losses. Cybercriminals can also use stolen information to set up fraudulent wire transfers and cryptocurrency transactions

Some cybercriminals have even found ways to steal money from businesses by holding data for ransom. Ransomware can make it impossible for a company to access certain data that it owns unless a certain amount of money is paid. Cybercriminals may also threaten to publish confidential business or customer information unless a ransom is paid.

A business can lose even more money if its stock prices plummet because of a data breach. In one study, share prices dropped by 3.5 percent on average 110 market days after a company suffered a data breach. Data breaches caused share prices to drop even more over the long term, resulting in greater financial losses for companies.

Major enterprises can usually weather these challenges and eventually recover financially from a data breach, but small and medium-sized businesses face even greater threats when information is stolen or misused in other ways. Smaller companies that lack the capital to cover major financial losses may be forced to discontinue their operations because of data breaches, which further highlights the problem of data falling into the wrong hands.

Legal Consequences

Additional financial impacts may be felt along with serious legal consequences if a business faces a lawsuit because of a data breach. Clients, vendors, and anyone else affected by the data breach could hold a business legally responsible if the company was negligent and failed to take certain steps to protect confidential information.

In addition to suing individually, people negatively impacted by a data breach may choose to file a class action lawsuit against a company. These lawsuits involve one or more people who choose to sue on behalf of a larger group of people. Class action lawsuits can be even more devastating for companies, as they often cost businesses a lot more money and garner more negative publicity. 

Companies can face additional legal consequences if they fail to notify customers and anyone else who may have been affected by a data breach in a timely manner. More legal trouble could be in a company’s future if a business also fails to implement new and improved security measures to try to prevent future data breaches.

Production Disruptions

Production loss is another major problem often associated with a data breach. Companies may be forced to spend more time trying to resolve a data breach instead of devoting their time and efforts to other important projects. Production disruptions are not always easy to recover from, and it could take years for a company to restore its full production because of a data breach.

Cyberattacks that result in data breaches can also prevent companies from functioning in certain capacities. This is especially true if ransomware is used to block access to crucial data that a company needs to fulfill its production requirements.

Business production might be interrupted further if a data breach results in a major financial loss. If money is lost to theft or lawsuits, a business will have less capital to devote to production expenses, which could limit the company’s output of goods and services that must be sold to make a profit.

Loss of Customer Trust

When customers sign up for memberships, purchase goods or services, or interact in other ways on a business’s website, they expect their privacy to be protected and the information they give online to remain safe. When a data breach happens, customers are likely to lose trust in a company and may choose to do business elsewhere. A reduction in customers could even force a company to go out of business.

Businesses should expect to lose even more customers if these individuals had money stolen because of a data breach. Identity theft is another major problem that often affects a business’s customer base. Customers could also lose trust in a company if their information was stolen because of a data breach and they later find their personal details posted on the dark web.

When customers lose trust in a business, they are also more likely to say bad things about the company. Customers who were affected by the data breach may leave bad reviews on social media and review websites and try to warn others not to do business with the company if they believe their personal information will be compromised. Word-of-mouth criticisms of a company that suffered a data breach can also hurt the business.

Lower Credit Rating

Data breaches can hurt a company’s credit score, making it harder for the business to secure financing. If a lender discovers that a business has a history of data breaches, the lender will likely charge a higher interest rate or could refuse to loan money altogether if they believe that the company is in a higher risk category. 

Businesses may also have more difficulty getting financing if lenders believe that data breaches are likely to occur in the future. Companies that have inadequate cybersecurity strategies or are unable to show their online risk mitigation plans to creditors are often charged higher interest fees or refused loans.

Intellectual Property Disputes

A business could find itself in a dispute over intellectual property if proprietary information is leaked during a data breach. If competing companies learn about a business’s unique ways of producing certain products or services from secrets that were obtained from a data leak, these competitors may try to use the intellectual property for themselves. Original written works might also be appropriated from a business because of a data breach.

Such problems could be compounded if no patents or copyrights are in place to protect the intellectual property. Without these protections, competing businesses can more easily lay claim to it if no legal proof is available to attribute the works to a specific company. 

A dishonest company or an unscrupulous individual might even try to claim that the intellectual property was theirs to begin with and take legal action against the originator if the business is unable to prove that the property was theirs in the first place. This further emphasizes the importance of preventing data breaches as much as possible and protecting intellectual property before a data breach occurs.

Higher Employee Turnover Rate

Data breaches can also create staffing problems that result in more employees quitting or being fired from their positions. An increased employee turnover rate can slow production and set a company back financially even more.

Some employees may choose to resign rather than endure the time and stress that it would take to try to resolve the data breach and prevent the problem from happening again. This may be especially true if the business fails to implement effective cybersecurity measures after a breach. Staff members who might be blamed for the breach may also choose to quit if they believe they were not at fault.

If certain staff members are terminated because of the data breach, the business will need to invest more resources to find qualified people to fill the vacant positions and train new employees. Current employees might also feel animosity if they believe that the old staff members were fired unjustly, and this can create more feelings of resentment and hostility among staff. 

The business could face additional challenges in finding new staff members if its reputation is damaged because of a data breach. Qualified job seekers may feel inclined to look for work elsewhere if a particular company has a history of data breach problems or is currently engaged in a major legal battle because of a data breach. Jobseekers might also believe that their own personal information could be jeopardized if they start working for a company that has a history of data breaches.

The Need for Business Data Analytics Experts

The continual problem of data breaches has opened the door to many people who are educated in data analytics and can use their skills to help companies resolve and prevent data breaches. Companies are more likely to keep data analytics experts on staff if these professionals are able to demonstrate how they can save businesses time, money, and additional resources by preventing data leaks or resolving them quickly if they happen. 

These experts can monitor data regularly to look for things that could compromise cybersecurity. Thorough data analysis can identify algorithms that could put data at greater risk of being compromised. When data is analyzed thoroughly, both outside and inside threats can be identified and stopped more easily.

Aspiring data analytics professionals can learn how data analytics helps business networks avoid data breaches by getting the proper education. With the right degree, such as a Master of Science in Business Analytics from St Bonaventure University, people who want to work in this field can explore different career options in the data analytics field to find positions that suit their interests the best.


Even with the most advanced cybersecurity systems, data breaches will continue to be problematic for many businesses. Fortunately, companies can take proactive measures to mitigate data breaches and hire the most knowledgeable professionals to monitor their networks closely. While data breaches will likely be a continuous problem, the number of occurrences can be reduced significantly with the right precautions.