3 Companies that Went Out of Business Due to a Security Breach
What is the true cost of a security breach? More is at stake than the business records, personal information and company data; the business’s reputation dangles on the edge of devastation. Many times, businesses suffer not only the financial devastations caused by security breaches, but they suffer the loss of consumer confidence. Both are as equally devastating and determine whether a business can recover. Every two seconds, a person became a victim of identity theft in 2013.
Who is Hit and How Much Does it Cost?
According to a 2013 Ponemon Institute research report, German and US companies have the most expensive security breaches: $194 in 2011 and $188 in 2012 per each record compromised. The United States is second only to Australia for the number for the average number of breached records. The average number is 28,765 per year. The US leads in the average total cost of data breaches with a $5,403,644 per capita price tag. The top five industries that typically suffer the most frequent and expensive breaches are as follows: healthcare, financial, pharmaceuticals, transportation, and communications. More than one-third of attacks are on businesses with fewer than 250 employees.
Top 3 Security Breach Failures
There is a lot at risk when a company fails to implement a successful and thorough security system, and some companies will never recover from the blow.
- Code Spaces
According to SC Magazine, Code Spaces, a former SaaS provider, is one of nearly 60% of small businesses that fail within six months of being hacked. The company was accessed via its Amazon Elastic Compute Cloud control panel. The hackers erased data, backups, offsite backups, and machine configurations before attempting to extort the business by claiming a “large fee” would resolve their issues. Code Spaces took steps to change all of its passwords, but the damage was done. The criminal had already created backup logins. Code Spaces was unable to continue operations as it acknowledged that the company had suffered debilitating damages to both its finances and reputation.
Although the details of the swift Nirvanix departure are unclear, consumers were left scrambling for new providers and services. It only took six weeks for the vendor to transform from business as usual to demanding customers remove their data quickly and with little notice. The company went belly-up not much later.
The online company was once valued at $100 million, but when the chief executive fired the chief technology officer and two other senior officers, who did not agree with the owner’s decision not to sell the company, the trio launched a revenge attack that crippled the site. After the company spent over $1 million in an attempt to resolve the breach, the company’s board decided to take the site down because it had been rendered useless.
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