When most people think of cybercrime, they picture data loss, corrupted information, and being locked out of their bank account. While all this is true, one of the more severe implications of cybercrime for businesses is less tangible - reputational loss.
Cybersecurity breaches not only pose a significant threat to a company's financial health but also to its reputation. In today's digital age, customers expect businesses to protect their sensitive information from cybercriminals. A cyberattack can severely damage a company's image, resulting in the loss of customer trust, negative publicity, and lasting brand damage.
In this blog, we will explore five ways that cyberattacks can damage a company's reputation and why it's essential to prioritize cybersecurity measures.
Loss of customer trust
A successful cyberattack exposes a company's failure to protect its customers' sensitive data, leading to a significant loss of trust. IBM Security found that reputation loss can lead to $1.52 million in lost business, and the IDC found that 80% of consumers in developed nations will defect from a business if their information is compromised in a security breach.
This loss of trust can result in customers choosing to do business with competitors who demonstrate better security practices - which is why nearly 60% of businesses end up closing their doors after a breach.
Negative media coverage
When a high-profile cyberattack occurs, it often attracts media attention, especially when it involves well-known organizations or a large number of affected customers. This negative publicity can further erode public trust in the company and its ability to protect sensitive information.
A devastating example can be found in the 2018 British Airways data breach. The airline was processing data without the prescribed protection - something that came to haunt them when cybercriminals hit them with a DDoS attack while stealing the personal data of approximately 429,612 customers and staff. British Airways ended up being fined £20 million for not putting in place the required security measures, and the resulting legal settlement could cost as much as £2.4 billion.
However, this cost was nothing compared to the reputational damage they sustained. Indeed, the data breach was highlighted as one of the reasons that the airline’s reputation fell to a four-year low in 2019.
Impact on stock prices and financial loss
Cyberattacks can also have a direct impact on a company's stock prices. The stock prices of companies that experience a data breach can underperform compared to the overall market for several years following the incident. Additionally, the financial losses from a cyberattack can be substantial, including costs for data recovery, legal fees, and compensation for affected customers. According to a 2021 study by IBM, the global average data breach cost was $4.24 million, the highest in 17 years.
Cyberattacks also affect the confidence stakeholders have. When Capital One disclosed that it suffered a data breach, its share price immediately dropped nearly 6% in after-hours trading. In the two weeks that followed, the share price plummeted by nearly 14%.
Loss of business opportunities
Following a cyberattack, a company's reputation may suffer to the point where potential business partners or investors become hesitant to engage in new ventures. This reluctance can lead to missed opportunities for growth and collaboration, ultimately hampering the company's long-term success.
Although it’s difficult to quantify on a case-by-case basis, according to ITPro, there is a 60% failure rate among SMBs after a company discloses a breach within 6-12 months due to confidence issues and partly due to recovery challenges.
Employee morale and recruitment
A cyberattack can also affect employee morale, as staff may feel that their employer failed to adequately protect their personal information or the organization's critical assets. Additionally, the negative publicity surrounding a cyberattack can make it challenging to attract top talent, as potential job candidates may be wary of joining a company with a tarnished reputation.
Conclusion
In today's digital landscape, a company's reputation is closely tied to its ability to protect sensitive information from cyberattacks. Prioritizing cybersecurity measures is critical for businesses to maintain customer trust, avoid negative publicity, and minimize the potential reputational damage that can result from a cyberattack. By investing in robust, multi-layered security systems and fostering a culture of cybersecurity awareness, companies can mitigate the risk of cyberattacks - but never fully be free of them.
To help avoid reputational damage, SCION could be the best alternative. By rendering your critical applications and information hidden from cybercriminals, SCION diligently safeguards your company. Whether your employees operate within your premises or remotely, SCION shields your services and data through advanced features like geo-fencing, fast failover, and concealed pathing. SCION could fortify your digital infrastructure and keep your organization's reputation intact.
Contact us for more information.
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