The Cost of Non-Compliance: Why Following Security Standards Is Crucial

The modern business world is run on the Internet, with significant security risks and personal data protection issues. We certainly cannot change the way business works today, but we can do some things to improve security. Authorities have also realized this and set up some security standards for companies. 

Indeed, compliance with security standards is crucial to running an online business. After all, you’re collecting consumer data every day and storing it in your data centers. What’s worse is that these people share financial information by ordering goods online, and this is a real problem if security is overlooked. In this article, we’ll look into what happens if you are non-compliant, and explain some of the costs that come with it. 

The financial cost of non-compliance

As a business, the financial costs associated with non-compliance come first. For-profit organizations need to cut down on costs and legal fees and penalties rooting in non-compliance definitely do not help. So let’s understand how this issue might be a financial roadblock for you. 

Imposition by GDPR or PCI DSS 

The General Data Protection Regulation (GDPR) and Payment Card Industry Data Security Standard (PCI DSS) impose significant fines for non-compliance. The extent of the penalty depends on the severity of the said data breach, but it is for sure impactful. 

For GDPR, the fines usually start from a few thousand Euros and go all the way to tens of millions of Euros. For the PCI DSS regulation, this can even top GDPR penalties since this regulation is focused on financial information, which is considered highly sensitive. 

Loss of business and revenue due to data breaches

Non-compliance can also result in loss of business and revenue due to significant data breaches. Security regulations aim to improve the overall protection of a company’s network and suggest ways to do that. If you are non-compliant with these standards, you are likely to be attacked. 

As a result, you may experience operational disturbance in your company which leads to a loss of business for a certain period of time. Secondly, if there is a known breach in your company, customers may take their business elsewhere so your revenue goes down significantly. 

The operational cost of non-compliance

Failing to achieve security compliance ( results in operational costs too, which usually leads to loss of business anyways. But in addition to that, you need to consider the trust of your customers and their expectation that you’ll deliver your service at all times. Below are some of these costs to give you a better insight. 

Time and resources spent on recovery from data breaches

After a potential data breach that is resulted from non-compliance with security regulations will set you back in terms of resources. There will be a phase where you work on the mitigation of the breach and the investigation of its causes. You’ll also need to contact affected clients. These will reduce your operational utilization and take you away from daily tasks. 

Increased security measures to mitigate future breaches

You might be staying off from security regulations thinking that it’ll cost you a lot, but non-compliance can actually cause increased spending on security. You may need to implement new security measures, hire new personnel, and spend time onboarding them and setting up the new tools. These would have been prevented if you were compliant with the standards beforehand. 

Downtime due to security incidents and loss of productivity

Flawed security systems can result in shutdowns and downtime during the healing and researching period. If your system is affected, employees may not be as productive as before and clients may not be able to access your services. This means that you’ll be unable to continue your operations both from the inside and the outside of your organization. 

The legal cost of non-compliance

Perhaps one of the most important aspects of non-compliance is the potential legal costs. Security standards are set up by authorities so they have the power to impose legal penalties which go beyond just financial losses. These are very serious for any professional organization so we wanted to talk about this in more detail. 

Lawsuits from affected customers or stakeholders

Any potential data breach that causes a violation of security and data protection standards will affect your customers or stakeholders. It is the responsibility of the company to protect its users’ personal information, and the users have the right to file a lawsuit against businesses failing to do that.

These lawsuits can be costly, damaging your business in the short term. However, what’s more, important than that is the reputational damage you’ll take from the lawsuits. There will be serious concerns about whether any stakeholder or customer will want to do business with you after the breach. 

Additional implications caused by failure to report breaches 

A data breach does not have to have direct effects to result in legal penalties. Any data breach, even if it does not cause any damage to sensitive information, is required to be reported according to authorities. This is made clear by many security regulations around the world, and if you are non-compliant with this point, there will be fines waiting for you. 

Another important aspect of this is the risk of getting negative publicity once the breach is realized by the authorities. You may find yourself getting fined by authorities while also losing business because of a ruined business reputation. 


Compliance with regulatory bodies is a must in today’s business world. If you running a web-based company that deals with sensitive and personal information, you have to make sure to protect them with the approved methods. 

Non-compliance, which means that you are not on full terms with the regulations, causes legal penalties, business loss, other financial costs, and significant trust issues with your customers. 

Ultimately, if you take the time and invest in these standards, you’ll benefit in the long term and save your business from the above-mentioned consequences. It is always important to remember that an organization is responsible for the protection of its users.

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