In our digital world, personal data breaches are becoming increasingly common and, consequently, increasingly costly. When customer data is compromised in a data breach, it costs the organization even more than just financially — a data breach can tarnish your organization’s reputation and ruin customer trust in your company.
Companies need to understand the fundamentals of the personal data protection act, as well as the consequences of a personal data breach so they can take the appropriate measures to minimize their risk and protect their company and consumers. Here are ways businesses are impacted by breaches and tips for preventing a devastating data breach.
- Finances and Revenue
With legal fees, fines, and settlements, a data breach can be costly, and the financial impact of a data breach only continues to increase each year. Whether your company has a small customer database or millions of personal records, a data breach that exposes sensitive customer data can be extremely costly for your business.
Your company loses huge revenues when customers decide to take their business elsewhere. Although your company can observe the drop in income, it isn’t very easy to measure just how many potential sales you lose when your customers lose faith in the security of your business.
- Brand Value and Reputation
Your brand’s reputation is a huge yet immeasurable asset. How your brand is perceived affects your customer attraction and retention, as well as which stakeholders and valuable talent your company is able to win. An organization with a poor reputation will struggle to attract talent and may find it hard to seek support from investors. If a severe data breach tarnishes your brand’s image, you are likely to lose revenue and customers.
A data breach is one of the threats to the reputation and value of your business. Data breaches involving customers’ credit or bank information tend to have a more severe impact on brand reputation than those involving only phone numbers, email addresses, and home addresses. If a personal data breach, however, involves investor data rather than customer data, your relationships with investors would be greatly impacted, while your company’s public reputation may remain intact. Nevertheless, with data breaches receiving a lot of negative attention in the news and on social media, the impact of a data breach for your company’s reputation can be severe, regardless of what kind of security breach you experience.
How a company addresses a data breach is a part of the fundamentals of the personal data protection act. Organizations that act quickly, transparently and efficiently to a security breach can earn back consumer and stakeholder trust. Unfortunately, too many companies fail in their response to a data breach by denying responsibility, communicating with customers inefficiently and responding much too slowly.
As data security breaches become a much more common concern, companies must be prepared to respond immediately and save their brand value and reputation from damage. The damage of a data breach on a company’s reputation can take a while to repair, primarily if the breach is not managed efficiently. Big companies with a trusted brand image often have an easier time recovering from a data breach, while smaller companies may suffer irreparable damage to their business.
- Consumer Trust
When consumers provide companies with their personal information — including phone numbers, addresses, credit card and bank information and more — they are trusting that company to keep their data secure.
Once lost, customer trust can be challenging to earn back. If organizations hope to preserve customer trust following a data breach, they must be accountable for protecting consumer data before a security issue arises. Companies that establish strong security and data protection measures before a breach lower their risk of a data breach occurring and likewise enjoy more customer trust from the start.