When most leaders think of data breaches, they think about the business disruption, client impact, and negative PR. Not to mention the actual unplanned financial cost of investigating, containing, and resolving the incident. From legal fees to fines and penalties, those numbers can add up quickly. We’ve never worked a declared incident where outside counsel was pulled in for less than $35K, and that’s without declaring a data breach. But short of a declared breach, those third party costs typically aren’t the ones that sting the most.
Real damage of an incident or a data breach manifests within the organization. In this blog, we’ll dive into the immediate expenses you don’t see on the tally: the impact on productivity, the toll on employees, the strain of broken customer communication, and the ripple effects that make recovery harder than anyone expects. We’ll also talk about how preparation and culture play a key role in minimizing these hidden costs.
Imagine you’re a SaaS provider and a malicious actor figures out how to abuse your application's business logic. This is not a simple misconfiguration that your IT team can identify and handle, it’s a real engineering issue that often is more complex to resolve. Suddenly, only your most senior developers, the ones who know the application architecture inside and out, can track down and investigate the incident and potential impact. Now, they need to tackle a quarter’s worth of unplanned work instead of the planned roadmaps that were going to move your business forward.
Although external incident response experts can advise you, they don’t know your application’s code, product workflows, or operations. So your senior devs are deployed with your privacy and security teams, possibly advised by IR consultants, to investigate and contain the incident. The very people you rely on to build your business’s future are digging through application logs that weren’t built for efficient forensic investigation. Depending on readiness and the circumstances, this process can drag on for weeks or months, especially if a data breach is discovered. And then there’s the P-0 remediation work, which in our business logic example, can only be fixed in code. In some cases, companies lose half a year or more of progress due to a single breach.
When a critical cyber incident hits, this can be one of the most stressful and paralyzing moments for an executive team. There are often so many unknowns and decisions that need to be made, such as the amount of work needed to contain and remediate the incident and which employees to deploy and where. These incidents also require cross-departmental collaboration, and if this is already an organizational weakness, this is where leaders are severely tested.
On top of that, your most senior developers—who were already in demand—suddenly find themselves on call around the clock. They’re working with limited resources, under constant pressure, and with investigation touchpoints and additional management briefings eating into what is otherwise productive development time.
Over time, this relentless pressure can produce burnout. Productivity drops, creativity dries up, and your top developers start to wonder if the toll on their mental health is worth staying with your organization. Turnover at this level can be brutal, adding to the stress of technical executives already feeling the pain of incidents or breaches as well as recruiting and HR.
The impact of a declared or otherwise publicized breach doesn’t stop at your engineering, security, or IT department. The damage to the organization’s reputation (the revenue that is deferred or lost) is directly impacted by its ability to communicate in a timely, honest and meaningful way with external stakeholders and the media. The possibility of legal liability makes this very delicate and difficult task even harder on executives. But the tax on the organization does stop there. It can hit your sales and customer-facing teams, too, making it harder for your organization to hit targets and retain customers.
In the event of a declared data breach, external-facing teams carry the heavy burden of fielding, and routing or answering directly, all the urgent customer questions. And once the message is delivered, trying to rebuild trust and assuage concerns. Burnout for customer-facing teams, too, is real. If the communication isn’t consistent, honest, and authentic, and meaningful customers will let them know. Worse, if management isn’t involved and front and center in the communication, all this stress lands solely on these folks, who are left to deal with the emotional toll of frustrated and concerned clients
Breaches and other serious cyber incidents are much more than a security event. They’re a test of your organization’s resilience.
Will your business lose months to recovery, or will it be able to keep momentum? Will your culture hold up under the pressure? What will leadership decide to sacrifice in order to solve this problem? Is leadership prepared to communicate effectively with external stakeholders during or immediately after a breach?
At IOmergent, we help companies prepare for these questions before they’re forced to answer them. Through incident simulations, embedded security teams, and more, we give leaders the confidence to face security incidents and breaches head on.
At the end of the day, the real price of a breach isn’t just the bill. It’s the hit your team takes and the momentum your business loses.