The Financial Fallout of Cybercrime: Are You at Risk?
It is becoming increasingly clear that the cost of cybercrime on the global economy is having a huge impact and continues to rise every year. Criminal gangs target financial institutions and individual consumers on a daily basis and make off with billions of pounds, sometimes just using a PC. New sophisticated methods keep even the most skilled and highly trained cybersecurity units on their toes.
However, not all crime is conducted directly online. Some people are tricked into giving away details over the phone or are told to use their banking app to transfer money into a safe account. This multi-channel approach means that at every touchpoint, an organization must be aware that their customers could be at risk; they need to put systems and processes in place to mitigate cybercrime.
According to a report by McAfee, the European economy is one of the worst affected areas in the world. The statistics suggest that 0.84% of Europe’s GDP is affected. Looking at the UK specifically, it is estimated that the cost of cyber-crime to the UK economy is £27bn – and it is growing.
GDPR and Customer Data Breaches
One of the latest and most high-profile risks that have come to people’s attention over the past 18 months are customer data breaches. Customers are increasingly aware that organizations hold a lot of their personal data and they want to be sure that it is safe. The General Data Protection Regulation was brought into place to ensure that organizations are acting responsibly when it comes to processing and storing customer data.
The financial impact of not following these guidelines, or for not having the correct systems in place, has been significant. Just months after the new regulation came into place, British Airways were one of the first companies to fall foul when 500,000 pieces of customer data were stolen, which resulted in them receiving a £183m fine.
The Financial Fallout of Cyber Crime
Before any cyber-crime has taken place, there is a significant cost to businesses that need to purchase software, implement new processes and training, and even employ new cybersecurity teams to deal with threats. For global organizations, there may also be a need to hire consultants to advise on what they need to do to keep themselves and their customers safe.
One of the consequences of cybercrime that will affect every business is the direct costs. This could be money lost by the business or by consumers. It could also be the loss of reputation to a brand. If a bank suffers a cyberattack and customers lose money, they are likely to lose confidence, which can have a huge knock-on impact on business performance and profits.
Following on from an attack, there may also be payments that need to be made. On top of losing money in an attack a business, may also need to pay out compensation, fines, and legal costs. Depending on the type and severity of the attack and the data that was lost, this can amount to millions of pounds, as demonstrated by the British Airways case.