In recent days, more and more companies are attacked by malicious hackers which are trying to breach personal data. However, most companies are not equipped with the needed security measures to reject these attacks. Data breaches these days typically affect millions of users with just a single attack against a single firm.
Attacks that compromise customers’ private financial data cause the greatest harm, degrading stock values and scaring customers away. Financial losses are not the only issue of concern to businesses in financial industries; data breaches erode users’ confidence and can damage a firm’s reputation.
Data breaches require a significant expense to solve the breach, as well as to determine what information was stolen and who was affected by the breach. Businesses that are victims of a data breach can face costs associated with mandatory credit monitoring of customers whose data has been compromised. One consequence of a data breach is that the company targeted will be liable to conduct forensic investigations in order to identify the causes of the data breach.
When a data breach occurs, businesses typically rush to inform customers, revamp security systems, and limit damage to their bottom lines and consumers’ confidence. While data breaches appear to be more common now because of cloud computing and increased digital storage, they have existed for as long as companies have maintained sensitive information and personal records.
When companies experience breaches of personal data, such as social security numbers and banking information, the average direct stock-market value loss is 1.12%, or $607 million, based on an average stock market value of $54.2 billion. After suffering a breach of customers’ personal data, the average firm that was attacked lost 1.1 percent in market value and experienced a drop in sales growth of 3.2 percentage points from a year ago.
