How can financial loss occur as a result of a data breach?

A data breach can lead to financial loss in several significant ways, and one of the most impactful is through legal fees and settlements. When a company experiences a data breach, especially if it involves sensitive customer information, it may face lawsuits from affected individuals, regulatory fines, or penalties from governmental bodies. Legal representation and the costs associated with the litigation process can accumulate quickly, resulting in substantial financial expenditures. Furthermore, if the company is found to be negligent in its data protection practices, it may also be required to settle claims which can lead to additional financial obligations.

Other choices relate to different aspects of financial loss. For instance, investment in new technology may be a necessary step for recovery post-breach but does not represent a direct loss caused by the breach itself. Similarly, while paying a ransom for data recovery can indeed cause financial loss, it is more context-specific and isn't as universally applicable as legal fees, which can arise in virtually all data breach incidents. Finally, while decreased employee productivity can indirectly lead to financial loss, the connection to the breach is less direct and substantial compared to the legal repercussions that typically follow data breaches.