Cyberattacks are creating huge financial burdens for businesses, with breach-related costs, legal challenges, and operational disruptions forcing some to shut down. Real-world cases show how companies struggle to recover, indicating the need for stronger defenses, better insurance coverage, and contingency planning to withstand financial fallout.
The increasing frequency of cyberattacks is creating financial burdens for businesses, often pushing them toward bankruptcy or permanent closure. According to a 2024 IBM study, data breaches cost companies an average of $4.9 million globally, with costs nearly doubling in the United States due to stringent regulatory requirements and litigation. The International Monetary Fund has warned that the surge in cyberattacks since the pandemic has heightened the risk of “extreme losses,” jeopardizing companies’ solvency.
Large companies, such as the US-based units of Stoli Group, have directly cited data breaches as contributing factors in recent bankruptcy filings. Stoli Group suffered a ransomware attack in August 2024 that disrupted its internal systems and compliance processes, forcing the company to seek Chapter 11 relief. Similarly, National Public Data, a background check provider, filed for bankruptcy in late 2023 after a breach exposed millions of records, leading to class actions, regulatory investigations, and the costly task of notifying affected individuals.
Specialty insurer Hiscox Group reported that one in five businesses surveyed across eight countries were pushed to the brink of insolvency by cyberattacks. In its 2024 Cyber Readiness Report, Hiscox noted that 70% of U.S. companies experienced an increase in cyberattacks, averaging one attempt per week. Attorney Angelo Gasparri, who represented National Public Data during its bankruptcy, described the aftermath of a breach as a “cascade of chaos,” where victims bear the financial and operational brunt of an outsider’s actions.
Healthcare providers are disproportionately targeted, with FBI data proving the sector's vulnerability. For example, nursing home operator Petersen Health Care Inc. filed for bankruptcy in March 2024 after a ransomware attack disrupted its billing systems and access to financial records. Additionally, the fallout from a widespread 2023 cyberattack on UnitedHealth Group’s Change Healthcare subsidiary had ripple effects on businesses like Petersen, delaying reimbursements and impacting their financial stability.
Cyberattacks often cripple companies’ operations, leading to issues that complicate recovery. Stoli Group’s ransomware attack, for instance, disabled accounting and compliance functions, while Petersen Health Care struggled to recover lost billing records. The American Medical Association reported in April 2024 that 80% of physician practices affected by a cyberattack lost revenue due to unpaid claims, with some expressing fears of bankruptcy.
National Public Data’s bankruptcy case demonstrates the growing reliance on cyber insurance. A Florida judge dismissed the company’s Chapter 11 filing, citing the risks its lack of coverage posed to both the business and the public.
As online vulnerabilities increase, cyber insurance is becoming more difficult to secure. The challenge is similar to obtaining hurricane insurance in high-risk areas—premiums are steep, and coverage limits often fall short. Mid-size and large companies, frequent targets of sophisticated cyberattacks, struggle to find adequate protection.
Cyberattacks are no longer just IT concerns; they are existential threats capable of dismantling businesses overnight. The financial, legal, and operational consequences are undeniable, with real-world cases proving that recovery is far from guaranteed.
Survival demands more than reactive measures—it requires foresight, investment, and resilience. Strengthen your defenses before an attack tests them. Secure cyber insurance while you still can. Build contingency plans that ensure your business can withstand the unexpected.
The question is no longer if an attack will happen, but when. The decisions made today will determine whether your business weathers the storm or becomes another cautionary tale.
Companies should evaluate their exposure by conducting cybersecurity audits, stress-testing financial resilience, and reviewing legal obligations related to data breaches. Understanding regulatory requirements, industry risks, and past attack trends helps identify vulnerabilities.
Beyond direct losses, businesses often face prolonged revenue disruptions, reputational damage, loss of customer trust, regulatory fines, increased insurance premiums, and legal costs. The long-term financial strain can outlast the initial incident.
The frequency and severity of attacks have made insurers more selective, leading to higher premiums, stricter eligibility criteria, and coverage limitations. Businesses with weak cybersecurity measures may struggle to qualify for adequate protection.
Companies should implement strong security frameworks, such as multi-factor authentication, incident response plans, employee training, and regular system updates. Demonstrating a proactive security posture can improve insurability and lower costs.
A solid recovery plan should include clear response protocols, data backup strategies, legal and PR response plans, and financial reserves to manage disruptions. Regular testing ensures the plan is effective when an attack occurs.