Given the public’s short attention span and the rapid turnover of items in a news cycle, a corporate executive can be excused for dismissing the reputation effects of a data breach on his or her business.
Recent reports of large-scale data breaches emphasize this causative relationship
Hurts Public Perception
The public perception of the credit score company, Equifax, was weak even before it reported the loss of more than 140 million consumer records in a data breach. After the report became public, the company’s perception among consumers became overwhelmingly negative.
Uber Incident Impact
The ride-share company, Uber, had already been struggling to prop up its reputation following a series of highly-publicized missteps when it reported its data breach loss of the personal information more than 57 million drivers and riders.
Target Incident Impact
The consumer products retailer, Target, has mostly recovered from the massive data breach it suffered in 2016. In the wake of that breach, Target experienced a sales decline of more than 46 percent on a year-to-year basis with a corresponding 10 percent decline in the price of its stock.
Plan For The Worst
Target’s response to the data breach it experienced is illustrative. Showing a commitment to cybersecurity by budgeting for new security measures will give consumers clear evidence of a company’s concerns over its customers’ personal and financial information.
Insurance Could Be Helpful
A good data breach insurance policy will cover a company’s direct losses and third-party liabilities that arise from the breach. Consumers whose personal and financial data are stolen in a breach will generally not hesitate to sue the affected company for its failure to take better care of their data.