Organizations are successfully targeted and breached by hackers daily compromising the data of millions in the United States and worldwide. The financial implications are huge, but the damages to individual consumers can be near impossible to estimate.
Credit reputations can be destroyed, illegal activities can be committed in their name and it can take years to correct the issues. As data breaches continue to be a regular occurrence, companies are faced with pressure from customers, investors and regulators to improve the security and reliability of their technological infrastructure.
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Compliance
The United States Securities and Exchange Commission (SEC) is more active than ever requiring organizations to safeguard data and holding them accountable for damages inflicted by data breaches. Companies may face stiff penalties if found to be non-compliant. When cases of cyber-attacks occur, the SEC counts on a forensic team that investigates the incidents.
They also guide organizations to help them avoid falling victim to these attacks. However, the pressure to improve security is such that companies like Liaison Technologies have developed Brand Registry Protocol to improve compliance, exceeding the regulatory data management standards currently in place for industry.
Financial Impact
Companies have a vested interest to protect the data of customers and consumers. Along with the financial impact, there is the loss of reputation and the backlash from customers to consider. For publicly traded companies backlash can be even more damaging. Loss of investor confidence can lead to a massive sell-off of stock, causing a loss in market capitalization value.
Facebook shares declined by 7% as news became public that breaches in security had comprised user data. The decline cost the publicly traded company over 43 billion dollars in market capitalization over a period of a few hours.
Companies that rely on the accumulation of data to provide other organizations with accurate information of consumers to make important financial decisions have also fallen victim to cybercriminals. On July 29th of 2017, Equifax was victimized by hackers who exploited the organization’s security and stole the sensitive personal data of consumers, including social security numbers, addresses, and birth date.
The breach exposed the confidential information of 143 million Americans. Mortgage companies, financial institutions, creditors, and others rely on the information obtained from consumer reporting agencies to process loans. The fact that Equifax compromised such information produced a severe lack of confidence that cut revenues by 4% in the last fiscal quarter of 2017.
Importance Of Data
Businesses and government widely recognize data as an organizational asset. Today, data is converted into information, which is built into actionable knowledge to assist leadership in making better-informed decisions in practically all aspects of a business. However, data breaches and hacks can generate a loss of data or damage to stored information. Therefore, the consequences of the security attack have the potential to produce incalculable losses if the data cannot be recovered.
Consumers and governments are increasingly demanding more control and transparency around the collection, storage, management, and protection of personal data. Organizations that compromise user trust experience the tangible repercussions of this breach, including the loss of consumer and investor confidence, which directly damages their reputation and subsequent market value.
In today’s privacy-conscious market, businesses must fully commit not only to data protection but also to the responsible and transparent use of any data in their possession.
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