Data breaches have become very common in organizations at this particular point in time. As per various research, about 28% of companies are vulnerable to data breaches. Every data breach causes billions of pounds in losses to the organizations.
Disclosure of personal customer records and sensitive information can cause a loss in business revenue, security costs, and heavy fees and fines. Data breaches cause extreme financial losses and damage the repute of the company. Customers also lose their trust in that particular organization.
Therefore, it is extremely significant for the organization to understand the value of data breaches. This will enable them to adopt important measures to eliminate the risk of cyber security. This will protect their customers and the company. For this reason, all the companies keep on looking for the best security testing companies.
Keeping this scenario under consideration, we are presenting to you 5 ways data breaches can impact the stock market share price.
It Negatively Affects The Business continuity
It must be kept in mind that data breaches can have a very long-lasting effect on the repute of your organization. If the company is unable to safeguard against some common cyber security risks then you will lose productivity, revenue, and customer trust. The customer will surely drag the matter to court. This is bound to impact the future sale of the company. For this reason, security testing companies find and monitor the security position of the organization.
Company’s Stock Value Is At Stake
The stock value can be adversely affected by data breaches. Nearly instantly after a breach is made public, particularly one that involves the data related to the customers can cause company stock value to decline. According to research conducted in 2017, 113 had data breaches, and when they made this news public their share price dropped immediately by 5%. Nevertheless, it was found that it can be reversed if the correct actions are adopted at the correct time.
It Causes a Loss of Reputation
Your customers, clients partners, and 3rd party vendors have provided you with their confidential data. It means that they trust you with this. If you encounter any sort of data breach leading to all your data being compromised. It will cause a loss of trust between business-related relations and other associated parties. Word of mouth (WOM), press leaks, and investigations can lead to a severe revenue dip. Therefore, your company needs to protect it.
This highlights the significance of reputation protection. It can be done by safeguarding your network with outstanding cybersecurity measures that are currently available. The best security testing companies offer an AI-operated simple, centralized, and automated risk-mitigating management approach. They create quantitative, objective reporting on an organization’s performance and cyber security risks. This allows companies with sprouting business needs, to operate business strongly in today, digital, collaborative, and open world.
This Causes an Extreme loss of Productivity
Data breaches can cause extreme losses in productivity. Decreasing cyber security risk is important to combat a few fundamental cyber-attack methods incorporated today.
One of the most common attacks is the ransomware attack. As per information, this attack takes all the files then these hackers demand ransom to give data back to the company. Another attack is a Denial of Service (DOS) Attack or any other attack that can only be corrected by a professional.100% protection of your business is not always guaranteed. However, decreasing cybersecurity risk is important to safeguard your business against all types of data breaches.
Financial Repercussions
A data breach may be severely expensive, and its likely effects on a company as a whole can get worse every year. The average cost of a data breach worldwide is now estimated by Ponemon Institute’s 13th annual Cost of a Data Breach research to be about GBP 3 million.
As per a study, the average cost of stolen or lost data rose by 4.8 percent the previous year. This has reached GBP 100 for each record incorporating sensitive and confidential data. It doesn’t matter if your company has a small or huge database, data breaches can cause irreversible financial losses.
Here is the list of some financial losses incurred due to data breach.
Regulatory fines: All the countries have their breach laws that expect the companies to disclose this news to all the relevant parties.
Legal fees: If the breach has leaked the credit card information of the customer, your company will be charged with settlement costs and legal fees.
Security expenses: After encountering a breach, the company will have to do something to reverse the outcome. This will result in heavy security expenses.
PR Expenses: Data Breaches can cause massive long-term and short-term losses to the organization. There will be bad publicity and negative word of mouth.
Loss of Revenue: People will lose faith in your company and choose to do business with others only because you may have experienced a single data leak.