As seven in 10 consumers claim to be more concerned about data security than they were two years ago, for the first time the damage caused by a data breach to an SME’s bottom line has been calculated.
The study, by Wilmington Millennium, reveals that SMEs missed out on £1.1bn of revenue last year, as a result of the brand damage caused by reported data losses. This equates to an average of £270,000 for each of the 4,120 SMEs that suffered a data breach in 2016.
The study found that on average 82% of customers would leave a company following a breach, irrespective of whether the organisation was at fault having been maliciously targeted by hackers or becoming victim to ransomware. This adds up to a significant proportion of an SME’s revenue and doesn’t include potential fines issued by the ICO. Nor does this figure include the future impact of a breach. TalkTalk’s revenue is continuing to fall following its very public breach in 2016 with customer acquisition dwindling, which is not surprising as research shows that one in five consumers say they would not do business with an organisation that had suffered a breach.
Karen Pritchard, Product Director at Wilmington Millennium, said: “The organisations that tend to hit the headlines for data breaches are the big boys like TalkTalk, the NHS, WPP and the AA etc. However, SMEs are being compromised every day and if consumers find out, it significantly impacts their bottom line. Organisations of all sizes need to understand that customer data has to be properly looked after or face the harsh reality that for many a data breach could spell the end of the road.”