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.