We are all living a world where our personal information, account information, sensitive financial and health records are enshrined in the databases of hundreds of organizations.  Every single human being should care about data security as an individual.  Similarly, every single executive should care about the data security practices of their organization.

​

In our increasingly digital world, where data breaches and cyberattacks are becoming alarmingly common, the importance of robust information security cannot be overstated. For organizations considering ISO 27001 certification, the decision to forgo this crucial step can lead to significant and often devastating consequences.

​

Below we are sharing areas of importance and concern, as well as specific examples of the potential and devastating costs of inaction, and why ISO 27001 certification should be a priority for every organization.
 

Financial Consequences of Data Breaches

One of the most immediate costs of skipping ISO 27001 certification is the financial impact of serious data breaches. According to the “IBM Cost of a Data Breach Report 2023,” the average cost of a data breach is approximately $4.45 million. This figure includes direct costs, such as legal fees, regulatory fines, and the expenses associated with notifying affected individuals. Additionally, organizations may face indirect costs like lost business and damage to their brand reputation.

In 2017, Equifax, one of the largest credit reporting agencies, whose data contains people’s social security numbers, suffered a massive data breach that affected 147 million consumers. This endangered affected people in that their identity could potentially be stolen, with devastating consequences for those individuals.  The total costs associated with the Equifax breach were estimated at $1.4 billion, including settlements, legal fees, and increased cybersecurity measures. This incident underscores the enormous financial risks associated with inadequate information security.

 

Regulatory Non-Compliance and Penalties

As data protection regulations like GDPR, HIPAA, and CCPA become more stringent, failing to achieve ISO 27001 certification can leave organizations vulnerable to non-compliance penalties. For instance, GDPR violations can result in fines reaching up to €20 million, or 4% of annual global revenue, whichever is higher.  Just imagine if Walmart were affected, the amount of the fine alone would exceed the GDP of many small countries.  Specifically, if Walmart, which has revenue of $611 billion in 2023, were fined under GDPR and had to pay 4% of its revenue as fine, that amount would be $24.44 billion.

In 2021, British Airways faced a fine of £20 million for a data breach that exposed the personal data of approximately 400,000 customers. The breach highlighted failures in security measures, as well as failures in compliance with data protection regulations. Achieving ISO 27001 certification could have helped mitigate these risks by ensuring robust data protection practices.

 

Erosion of Customer Trust

In a digital marketplace, trust is the currency of choice, it’s importance is paramount. According to a 2022 survey by PwC, 87% of consumers are concerned about data privacy, and 51% said they would stop doing business with a company after a data breach. For organizations that skip ISO 27001 certification, the risk of data breaches increases, leading to a loss of customer trust.  This, in turn, will lead to a loss of customers and, consequently, loss of revenue.

After the Target data breach in 2013, which compromised the personal information of 40 million customers, the company faced a significant backlash and lost customer loyalty. Target eventually had to invest heavily in rebuilding its reputation and security infrastructure.  So, the long-term impact of losing consumer trust can indeed erode the business foundation.

 

Increased Operational Inefficiencies

Without ISO 27001 certification, organizations may lack a structured approach to information security management. This can lead to disorganized processes, miscommunication, and inefficient resource allocation. In contrast, ISO 27001 provides a framework for continuous improvement in security practices.

In 2020, Marriott International reported a data breach affecting 5.2 million guests.  This data breach was attributed to a lack of proper security procedures and monitoring. The incident revealed operational inefficiencies that could have been addressed through a formal ISMS, resulting in smoother processes.  This, in turn, would have reduced vulnerabilities.

 

Missed Business Opportunities

In today’s competitive landscape, many clients and partners require evidence of robust information security practices before engaging in business. Skipping ISO 27001 certification could result in missed opportunities, as organizations lacking this certification may be excluded from tenders or partnerships that mandate adherence to recognized security standards.
 

A technology firm seeking to collaborate with a large enterprise may find that the lack of ISO 27001 certification limits its ability to secure contracts. Well-established companies like IBM and Microsoft often prioritize partnerships with organizations that can demonstrate adherence to international security standards, making certification a crucial factor for new business opportunities.

 

Inability to Respond Effectively to Incidents

Without a structured ISMS in place, organizations may struggle to respond effectively to security incidents. ISO 27001 certification equips organizations with the tools and processes needed to identify, respond to, and recover from incidents quickly.

The Sony PlayStation Network breach in 2011 resulted in the theft of personal information from 77 million accounts. The company faced significant downtime and a tarnished reputation. A well-implemented ISMS could have facilitated a faster and more effective response, minimizing the fallout from the breach.

 

The cost of skipping ISO 27001 certification can be far greater than the effort and investment required to achieve it. From financial repercussions and regulatory penalties to lost customer trust and missed business opportunities, the risks are significant.

In a world where data security is paramount, organizations must prioritize ISO 27001 certification as a fundamental step in safeguarding their assets, reputation, and future. By taking proactive measures now, your business can protect itself against the high costs of inaction and build a resilient foundation for success.

​

 

Speak with IBEC Experts Now to Get Launched on the Path of ISO 27001 Certification