How much does a data breach really cost a company? Ask Yahoo Inc. After a cyberattack compromised the data of at least 500 million user accounts, Verizon Communications, Inc. reduced its planned $4.83 billion acquisition of Yahoo’s core business by $350 million.
Yahoo revealed in September that it had fallen victim to a massive cyberattack in 2014. The announcement of the attack forced both parties back to the negotiating table.
While the monetary amount of a data breach, including the cost of a response plan, forensic IT and increased security measures can be quantified, it is often the harm to a company’s reputation that has long-term effects. When faced with a data breach, companies of all sizes have to answer to their consumers and rebuild the trust and confidence that was stolen.
On top of all this, the disclosure of the attack exposed Yahoo to a series of class actions alleging that the company violated federal and state consumer protection and privacy laws and left many wondering whether the deal would actually succeed. However, after negotiating new terms—and a new price of approximately $4.48 billion—Yahoo will remain liable for 50% of any cash liabilities after closing related to non-government investigations and third-party litigation.
Even if your company isn't worth billions of dollars, the ramifications of a data breach can have long-lasting effects. Proper planning for and protection against cyberattacks can save your company and its reputation.