Financial Loss

Financial loss is money an organisation loses because of a security breach. It is not only the amount of a fine: it also includes the cost of putting things right and the income that stops coming in.

Cost of sorting out the breach

Fixing a breach costs money even before any fine. Investigators may be brought in to work out how the attacker got in and which records were reached, and specialist IT staff may be paid, either from inside the organisation or hired for the clean-up. Extra secure storage may be rented and new monitoring software licensed while the problem is dealt with. The organisation also has to contact everyone affected, which can mean letters, emails and a helpline.

For example, a small online ticket agency finds an attacker has opened its customer database. It pays a security firm to investigate, pays two technicians overtime to reset every customer password, and posts a letter to 6,000 customers because the email addresses held can no longer be trusted. Each of those is a financial loss, even though no fine has been issued.

Income lost while trading normally is impossible

Money the organisation would have earned but cannot is also financial loss. While it cannot take payments or send out orders, customers may buy from a competitor instead, and some will not come back, so the loss can carry on after systems work again. Staff still have to be paid, so costs continue while income falls.

Penalties and legal costs

A fine from a regulator, lawyers' fees and compensation paid to affected customers are added on top. Legal costs can be large even if the organisation wins, because advice and representation have to be paid for.

Financial loss is often short-term, such as one large bill for an investigation, but it can carry on for months as legal cases are settled and customers are won back.