Implications of Internal Data Theft for Small and Medium Enterprises (SMEs). Part 3 Financial implications

The consequences of an internal data theft can be financially devastating. International research indicates that sixty percent of SMEs that suffer this fail within six months. This is a slow agonising death.

You need to make a serious assessment right at the outset to determine whether your business can survive and if not take action quickly to minimise the damage.

If you believe you can survive then develop, communicate and implement a strategy to ensure this happens.

If you are in, be all in, if you are out, get out quickly, minimising the damage to all stakeholders.

You need to determine who and why the data theft occurred: A theft by a competitor, while financially devastating to you may be less damaging to the clients whereas a theft that results in the data being in the hands of scammers will create a much higher risk profile for the clients.

Direct Costs:

The immediate financial impact of internal data theft can be significant.

You may face direct costs related to investigating the breach, hiring cybersecurity experts, public relations costs, staff management costs, compliance costs and the cost of recovering lost data.

Loss of Revenue:

Loss of revenue is a big factor, particularly when clients are reliant on you for the security of their data.

If the data is used by a competitor as a method of contacting the clients, then this will do untold permanent damage to your revenue and reputation.

As a starting point, it is an event of this nature that encourages the clients to take this as an opportunity to look around and assess alternatives to your services.

Internal data theft can lead to disruptions in business operations and a decrease in productivity. It will also lead to staff becoming unsettled. Good leadership is critical here.

If sensitive customer or proprietary information is compromised, SMEs may experience a decline in customer trust, resulting in lost sales and revenue.

Insurance Premiums:

Following an incident of data theft, SMEs might find their insurance premiums increase, especially if they turn to cybersecurity insurance. Insurers may view SMEs as higher-risk clients after an incident, leading to increased costs for coverage.

Litigation costs:

At some point you may be considering civil litigation and criminal prosecution.

Civil litigation is expensive and you need to consider the cost of this, financially and in terms of time, energy and stress. You also need to consider your objectives in pursuing it and whether the likely outcome cost versus benefit is worth it.

Criminal prosecution should be as simple as presenting the facts to the police and having them progress it. Remember you need to have proof beyond reasonable doubt.

You also need to understand that the Police are under pressure and you need to meet two tests, the evidential test and the public interest test. If you don’t meet either of these the Police will not prosecute.

There is another, more expensive option that is a rarely used avenue for a criminal prosecution. A private criminal prosecution where you can take a criminal prosecution against someone. It is an expensive and complicated process but worth looking at.

More on this in later discussions.

I think that is probably enough for today. It is a long and complicated process to recover from a data theft, the cost is enormous.

It is like every business problem you have ever faced comes at you in the space of a few weeks and then repeats for months.

All I can say is, act with integrity, be smart, be analytical, be creative, and unrelenting in your solutions. Use all of the tools you have developed over the years in business, and win.

Thank you for your time. If you want to reach out, please feel free to do so via private message or email me at Lance@usglobaltax.com

Have an amazing 20 24 and beyond.