No matter how disciplined your approach to security, there will always be a non-zero chance of an exploit occurring and bad actors gaining access to the internal data in your system. It is therefore extremely important to secure user data internally. Storing passwords and personal data unencrypted will multiply the negative impact of a security breach far beyond the simple fact of the breach itself. Encrypting and securing all sensitive data will add complexity, performance overhead, and expense to your server infrastructure, but it's a necessary cost.