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Can a Data Breach Affect Your Brand Reputation?

by Dolly Kate Ching | October 20, 2022 | Reputation Management, Rize Reviews News

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Can a Data Breach Affect Your Brand Reputation?

A scandal involving a CEO colossally defaces a company. But a Delinea-sponsored study on the impact of data leaks on a business’s clients, stock value and brand reputation revealed a data breach is even more damaging to your reputation than a CEO controversy.

Data breaches came in third among the top three detrimental incidents after poor customer service and an environmental issue. But unfortunately, many companies do not understand the adverse effect of data breaches on their reputation, which leads to financial loss.

Take Amazon and WhatsApp, for instance, which were issued the biggest General Data Protection Regulation (GDPR) fine to date — $877 million and $255 million, respectively.

To shed more light on the gravity of data breaches, we tackle these points in this blog:

  • What is a data breach?
  • How do data breaches occur?
  • The real cost of a data breach to a company’s brand reputation
  • How to recover from reputational damage due to a data breach
  • Minimize cyber reputational risk and prevent brand damage with vulnerability management

What Is a Data Breach?

A data breach is where sensitive, protected, or confidential data is accessed, obtained, copied, transferred or misused by an unauthorized individual or organization. This could be intended or unintended.

However, without vulnerability and data risk management, anyone is at a higher risk of a data breach, including small businesses, large corporations and even governments. 


How Do Data Breaches Occur?

The assumption is that an outside hacker is to blame for a data leak, but that isn’t always the case.

While attacks are often linked to hackers, breaches may, however, also result from a person’s carelessness or weaknesses in the infrastructure of a business. Weaknesses could be improper vulnerability management and assessment or lack thereof. Here are a few examples of how a data breach could occur:

An insider by accident. An illustration would be a worker viewing files on a coworker’s computer without the necessary authorization permissions. There is no information disclosed, and the access is accidental. However, the data is deemed compromised because an unauthorized party read it.

A malicious insider. This person willfully accesses and shares data to hurt a person or business’s brand image. Even if the malicious insider has permission to utilize the data, their goal is to use it for illicit purposes.

Loss or theft of devices. Anything with critical information, including an unlocked, unencrypted laptop or external hard drive, goes missing.

Outside criminals with malice. These are hackers who collect information from a network or an individual using a variety of attack methods.


The Real Cost of a Data Breach to a Company’s Brand Reputation

Consumers are very interested in data breaches and how businesses handle them. Owing to the internet’s power today, the scale of a data breach is tremendous. If a breach is dealt with poorly, customers likely lose faith in the brand or distance themselves from the company. They may even inform their network of the incident and choose to do business with a rival that offers them greater security. 

To testify, Delinea found that 65 percent of victims of data breaches declared the breach made them relinquish trust in the company. In addition, International Data Corporation (IDC) reports that 80 percent of customers in advanced nations will leave if a company’s security is breached. 

The additional findings of an Interactions Marketing survey reveal the importance of online reputation management (ORM), particularly feedback and sentiment monitoring, after a data breach: 

  • 85 percent share their stories with others.
  • 33.5 percent complain about their experiences on social media.
  • 20 percent leave comments on the retailer’s website directly.

Your business’s bottom line is also ultimately affected, reveals a study covered by Security Magazine. In fact, 52 percent of customers say they would be willing to pay more for the same goods or services from a company that offers better security. 

As such, it’s crucial you come prepared with a response strategy. And while the above stats lay bare the cost of data breaches for businesses, many still wonder if minor data breaches are good for some brands due to the publicity that ensues.


Can Data Breaches Be Any Good for Your Brand Reputation?

“Some people may want to publicize minor data breaches to get free PR and marketing,” said Tim Clarke, senior reputation manager at Rize Reviews. 

“However, the damage to the business and the reputation in public is too great to outweigh the benefit.”

As for the atypical case of Colonial Pipeline, one of the major fuel pipeline systems in the U.S., moving refined oil products:

The pipeline company fell victim to a ransomware attack in May 2021, which led consumers and investors alike to view the natural gas pipeline company as an innocent victim. Thus, the attack gave the company more recognition, and the public’s opinion of Colonial Pipeline’s brand reputation improved.

But according to experts, just because some businesses appear to profit from data breaches doesn’t mean they should run afoul of security measures and forgo data risk management and assessment.

Data breaches of any size present significant hazards and frequently capture the attention of authorities. Not to mention, their advantages are slim and transient.

“Data breach is too risky,” Clarke said.


How To Recover From Reputational Damage Due to a Data Breach

High-profile breaches in the past teach us what to do and what not to do following a data breach. So along with online reputation management and repair, let’s look at some steps you can take.

#1. Become the First To Inform the Public

Demonstrate your openness to the public amid a crisis. Doing so gives you the power to define the narrative following the breach. On the other hand, allowing another source to break the news automatically puts you on the defensive side and at a disadvantage.

So break the bad news as soon as possible and reply to inquiries introspectively and thoroughly.

#2. Take Part in Threat Information Sharing

Following a breach, your company may join a few organizations and initiatives. These organizations communicate details of their hacks to inform the security sector about new threats. Ultimately, this teaches everyone how to better protect themselves against continuously evolving cybersecurity threats.

One of the big businesses that joined two threat-sharing programs in the wake of the attack is retail giant Target.

#3. Implement a Thorough Notification Strategy

Controlling the breach is just as crucial as notifying your staff, clients and other pertinent parties. The notification process involves a large number of people, including:

  • IT and cybersecurity experts to explain what transpired (third-party cybersecurity threats intelligence team if you work with one).
  • Crisis management team to organize and centralize information.
  • Legal experts to review communications and keep the business informed of any regulations they need to observe.
  • C-suite executives and public relations to inform and update the public.

Businesses must be prudent in their course of action succeeding a breach. Here are some tips to avoid brand damage and data risk management blunders:

#4. Don’t Stall in Notifying the Public 

The penalties from consumers and authorities may worsen the longer you wait to inform the right parties about the breach. Equifax, Uber and other well-known companies that experienced data breaches came under heavy fire for how long they took to advise the public.

Besides the online or cyber reputational risk, there are also legal ramifications since GDPR only allows you 72 hours to declare the breach.

#5. Don’t Make Definitive Disclosures Prior to Verifying the Facts

Retracting statements further puts you in a bad light. Take Equifax and Yahoo as examples. Consumers were not pleased with Equifax’s repeated retractions of their claims and other missteps after the breach, including mistakenly sending them to a phishing website.

Yahoo also altered its claims regarding the number of accounts compromised during the breach; it didn’t help that the actual number was much higher. Unfortunately, this error and the series of hacks didn’t sit right with the public.

#6. Don’t Pay Hackers In Exchange for Silence 

Paying off hackers undermines consumer and public trust while igniting the “hacking market” and reinforcing hacking as a source of revenue. For instance, Uber paid hackers to remove stolen information and keep quiet about the attack. Many people have criticized the ridesharing firm for this decision.


Minimize Cyber Reputational Risk and Prevent Brand Damage With Vulnerability Management

With the help of vulnerability management, you can safeguard your organization before a possible breach; this involves identifying cybersecurity threats and managing all essential, sensitive assets and access points within your organization.

Purchase Reliable Access Control and Monitoring Software

Access management software can replace the need to manually sift through and dive deep into expansive employee and service accounts when something goes wrong. 

Apply Zero-Trust Network Architecture 

This structure means that nobody in your company can be trusted, and nobody is allowed to enter your network without your approval. In this setup, you only provide limited access to your employees at the required time.

Perform Risk and Vulnerability Assessments

Essential components of evaluating the security of an organization’s IT infrastructure are risk and vulnerability assessment. The main distinction between the two is that vulnerability assessment investigates systems to identify gaps (threats) that could lead to exploitation, whereas risk assessment acknowledges these known “threats” and assesses likelihood and impact.

Seek Out Third-Party Cybersecurity and Online Reputation Management Companies

Whether in a desperate situation seeking to recover from reputational damage due to data leaks or simply wanting to mitigate risks, you’ll find that getting outside expert help is beneficial either way. Big-name companies such as Salesforce and DISH Network Corporation work with external cybersecurity partners.

And for reputation management services, including white-label services to serve your clients, there are companies like Rize Reviews.

Rize Reviews is an ORM company that helps businesses repair their brand reputation in the event of a data breach and shields them from future incidents. We have a team of brand reputation specialists ready to help you get started with a free consultation.

Filed Under: Reputation Management, Rize Reviews News

About Dolly Kate Ching

Dolly is a Demand Generation Content Writer at Thrive. Her career revolves around the Digital Marketing space, where she helps local and international startups flourish through her creative copywriting and storytelling. In her spare time, you will find her enjoying a classic film with her family or appreciating a good book—with a cup of tea—by herself.

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