Most retailers are battling declining store traffic and consumers reluctance to spend. In addition to these concerns the retailer 'Target' also has to deal with the lingering negative impact of the company’s recent data breach. A consumer quarterly tracking survey by Cowen & Co.’s Consumer (the first time since Target’s security breach) found “meaningful decreases” in year-over-year customer satisfaction with both the total shopping experience and customer service. Brand image and reputation are "inextricably linked". Could your companys brand image and reputation weather a data breach?.
There’s a lot to lose if your company experiences a data breach. A recent study by the Ponemon Institute of 850 executives found that 44% of companies believe it can take 10 months to 2 years for a company to restore its reputation following a breach of customer data. These breaches have long-term effects on a brand's value. Importantly what type of data loss has the greatest effect on reputation, customer data, financial data, employee data. According to the study victim organizations lost anywhere from $184 million to more than $330 million in the value of their brands. At best, their brands' value lost 12 per cent of their value prior to the breach.
"The loss or theft of sensitive customer data, as our study quantifies, can have a serious impact on the economic value of a company's reputation," said Larry Ponemon, chairman and founder of the Ponemon Institute. "We believe this study makes a powerful point about the importance of taking steps to reduce the likelihood of a data breach."
Reports of data breaches affecting some of today's largest companies continue to grab news headlines globally. All organizations are susceptible to breaches of data, yet many are not prepared or equipped to handle the aftermath. For a company in the centre of a data breach incident, making amends and correcting previous errors to earn back the trust of their customers can be very difficult. When the balance of trust is compromised, it remains to be seen whether this confidence can ever be fully restored. In competitive industries and with today’s fast paced and unforgiving business environment, there is no shortage of competitors waiting to attract dissatisfied customers following a security breach.
The relationship between reputation and the bottom line is closely aligned as Sony experienced with its high profile data breach incident. This breach gave criminals access to 20 million accounts which including email addresses, phone numbers, passwords, and in some cases credit card numbers. Much of this information was for sale in several cybercrime forums. Following the breach Sony had to pay several substantial fines as a result suffered serious brand damage. Anything that can tarnish a brand will ultimately affect a company’s bottom line as damaged reputation can directly result in a reduced customer base, costly litigation and reduced revenue.
Anything that can tarnish a brand can affect a company’s bottom line.
"A solid reputation is a company's greatest asset, if you are responsible for a large amount of card payments and log-in details then keeping that personal data secure has to be your priority. Business leaders must take precautionary steps to protect themselves, their customers, their employees and their intellectual property against data breaches," said Ronan Kavanagh, CEO TitanHQ.
Plenty of companies have had security holes and weaknesses exposed in their systems but have been able to minimize the severity of the incident because of a strong response and through proving that proactive security processes have been implemented as a priority. Perception is reality in the public eye and how a company is perceived can ultimately lead to its success or failure. Regardless of length of time in business a data breach incident can rapidly call into question the quality and integrity of a company’s brand, products and services. It’s time that organizations take a proactive approach by asking how they can best protect their businesses against data disclosure events.
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