Cost of Underestimating Data Security for Brands

$400M – that’s the price tag when sensitive #data ends up in the wrong hands. On May 11th, Coinbase – the largest US-based #crypto exchange (100M+ users, $330B in assets) – received a ransom demand for $20M. A threat actor claimed to have internal account documentation and customer data. Coinbase has refused to pay, instead boldly offering a $20M reward for information on the attackers. Coinbase’s May 14th SEC disclosure revealed the troubling root cause: overseas support agents were bribed to leak customer data, enabling targeted social-engineering attacks. While passwords and private keys appear safe, personal details – emails, phone numbers, addresses, government IDs, and account data – might have been compromised. The company is estimating a cost of $180M-$400M for remediation and voluntary customer reimbursements relating to the incident. This breach underscores a critical truth: insider access to sensitive data remains a massive, underestimated threat. Coinbase’s detection tools worked – identifying unauthorized access and firing the responsible individuals months earlier – but the data had already escaped. Identity management, DLP, and proactive data monitoring have never mattered more. AI agents add powerful new capabilities but also complicate the risk picture. If you’re a #founder building solutions around identity, insider risk, or data protection, I’d love to connect.

I keep hearing leaders say, "Investment in Cybersecurity is expensive and just another cost center." That is not reality, it's an investment in your organization's ability to operate. Here is just one example to show some numbers and the cost difference between pro-active versus reactive cybersecurity: The cost difference between proactive cybersecurity and reactive cybersecurity is significant, as proactive measures aim to prevent threats before they occur, while reactive measures address incidents after they have happened. Here’s a detailed example to illustrate the cost difference: Scenario: A Mid-Sized Business Business Type: E-commerce company Size: 250 employees Annual Revenue: $50 million Cybersecurity Threat: Ransomware attack 1. Proactive Cybersecurity Costs Proactive measures include investing in tools, training, and services to prevent cyberattacks. Expense Estimated Annual Cost Endpoint Protection Software$25,000 Regular Penetration Testing$30,000 Cybersecurity Awareness Training$15,000 Managed Security Service Provider $50,000 Backup and Disaster Recovery Plan$20,000 Total Annual Proactive Costs$140,000 By implementing these measures, the business can significantly reduce the likelihood of successful attacks and minimize downtime in the event of an incident. 2. Reactive Cybersecurity Costs Reactive measures are taken after an attack has occurred. Let’s assume a ransomware attack encrypts critical data, halting operations for five days. Expense Estimated Cost Ransom Payment $250,000 Incident Response Team$50,000 Forensics and Investigation $40,000 Downtime Costs (5 days, lost revenue) $685,000 Legal Fees and Compliance Fines $100,000 Reputational Damage and PR Recovery $150,000 Identity Protection for Customers $75,000 Total Reactive Costs$1,350,000 The above costs DO NO account for long-term revenue loss due to brand damage, potential lawsuits, or customer churn, which could escalate further. Cost Comparison Approach Cost Proactive Measures $140,000/year Reactive Response $1,350,000+ Key Takeaways Proactive cybersecurity is a fraction of the cost of responding to an incident. Investments in prevention not only save money but also protect a business's reputation and customer trust. Organizations that prioritize proactive measures can avoid the cascading effects of a cybersecurity breach. This example demonstrates how "an ounce of prevention is worth a pound of cure" when it comes to cybersecurity.

A competitor told our prospect: "We can do it for 40% less." Here's what happened next. They chose the cheaper vendor. And 12 months later, they called us back. Their "budget-friendly" BPO had just suffered a security breach. Customer data was compromised. And when they asked their provider to investigate, they got a response that made their stomachs drop: "We don't have monitoring capabilities. There's no way to track what happened or who accessed the data." No audit trails. No security protocols. No accountability. What started as a cost-saving decision had become a compliance nightmare, a PR crisis, and a potential lawsuit rolled into one. They thought they'd saved 40%, but the real math probably looked like this: 💲 Initial "savings": $50K annually 💲 Legal fees and compliance remediation: $200K+ 💲 Lost customers: $300K+ in lifetime value Total cost of "cheap": Over $500K for a decision that was supposed to save them money. When they came back to Peak Support, the first question wasn't about price. It was: "Can you show us your security monitoring dashboard?" That conversation happened more than four years ago. They've been our client ever since. Here's what we've learned: The cheapest option is rarely the least expensive. When you're handling customer data, customer relationships, and your brand reputation, cutting corners doesn't cut costs—it multiplies them. Before you choose your next customer service partner, ask: ❓ What security certifications do you maintain? ❓ How do you safeguard customer data? ❓ How do you monitor agent activity? ❓ What's your incident response protocol? ❓ What insurance coverage do you carry for data breaches? The brands that succeed long-term don't just ask "How much?" They ask "How safe?" What's the most expensive "cheap" decision you've seen in customer service?

Data breaches aren't just headlines. They're your financial reality. Just read about Columbus Regional Healthcare System's $1.1 million settlement following their May 2023 cyberattack. Hackers exposed patients' Social Security numbers and health insurance data – information that can wreak havoc on your finances for years. The most striking part? Affected individuals can claim up to $5,000 with minimal proof. A receipt, bank statement, or invoice is all that's needed to recover fraud losses, professional fees, and credit expenses. Beyond the $5,000 maximum claim, every class member gets a share of remaining funds – estimated at $50 per person. This isn't isolated. The article mentioned three other recent settlements: • DC Health Benefit Exchange: $1.45M (up to $10,000 per claim) • Mulkay Cardiology: Up to $5,000 per victim • Vi senior living chain: Up to $6,500 per claim What's your organization doing to protect customer data? The cost of inadequate security isn't theoretical – it's $1.1 million in this case alone. And that doesn't count reputation damage, lost business, and operational disruption. Have you assessed your cybersecurity posture lately? The question isn't if you'll face an attack, but when.