Minimizing the Effect on Brand Value After a Data Breach
A brand owner discloses almost every week that a security or data breach has occurred. For privacy, operations, and trademark professionals alike, the ramifications of a data breach extend far beyond the direct costs of containing the breach.
By now there is ample evidence that the cost of consumer goodwill following a data breach can be monumental. Especially in an age where consumers are putting a higher value on their information privacy and security, the media attention – both on and offline – can diminish the goodwill, and consequently, the value of a company through loss of sales, stock prices, and consumer trust.
However, a study conducted by IBM, with input from attorneys working in the field, discovered concrete steps a company can take to preserve customer trust and mitigate the loss of a company’s brand value.
At a glance:
- A company can reduce the number of customers lost after a data breach if it has a Chief Privacy Officer or Chief Information Security Officer who is responsible for managing customer trust initiatives. Generally, having an incident response team can reduce the cost-per-record of a data breach as much as $14 per record.
- Offering post-breach identity theft protection helps reduce customer loss, which, in turn, reduces the total cost of a breach.
- If done carefully, a company can lower the cost of a data breach by containing it quickly. However, notifying customers without fully understanding the circumstances surrounding the breach increases the overall cost of the breach.
- Extensive use of encryption within an organization can also lead to decreased data breach costs.
Although the average per capita cost of data breaches varies by industry (health sector is $408 per capita and financial sector is $206 per capita), these preventative steps are effective regardless of the industry. Having a team in place with a prepared incident response plan and wide-spread encryption are effective in reducing the size and cost of a data breach. This, in turn, helps preserve a company’s goodwill and customer trust following a data breach.
For more information on the steps that mitigate and increase the cost of a data breach, review IBM’s full report here: https://www.ibm.com/account/reg/us-en/signup?formid=urx-33253.
Editor: Arsen Kourinian