Data Theft: How Your Business Can Be Affected?
The digital era has come with a new danger known as cybercrime. Data theft is on the rise not only in the United States but also in other parts of the world. Data theft is the act of stealing digital information stored on electronic devices, servers, and computers. Cybercriminals steal this information to obtain personal information such as financial, credit card information, among others. Additionally, hackers also compromise the privacy of innocent civilians. Anyone can be a victim of data theft, from large businesses to small enterprises and even individuals. Data theft can affect your business in the following ways.
- Consumer trust
People buy or use services from trustworthy brands. The success of your business is highly dependent on how much your customers trust you with their information. Trust is not easily built once there is a breach, especially due to a data breach. There are methods that a company can use to protect or get rid of active and non-active customer information. You must read about what is Data Destruction and how you can mitigate the risk.
- Financial repercussions
According to research, the average cost of a data breach is $3.8 billion. This includes; regulatory fines, legal fees, security expenses, PR expenses, and lost revenue. A company must adhere to the specific security data regulations for a particular industry. Failure to do so usually results in the company having to pay huge fines according to state laws. Security breach notification laws vary in every state. Industry-specific regulations include HIPPA in the healthcare industry. Every company, big or small, should double-check their data security and improve it regularly to avoid these financial repercussions.
- Stock Value
Studies have shown that a company’s stock value declines by 5 percent once a consumer data breach is revealed. A decline in stock prices can result in some significant company losses aside from lost revenue. In such a situation, a company must take the right steps in addressing the issue. Further research has shown companies who are quick to solve the problem tend to recover from a decline in stock value within seven days.
- Loss of reputation and brand value
A data breach can significantly cost your company’s reputation and brand value. Your brand is essential because it attracts and retains customers. A loss of reputation is one of the top damages caused by a data breach. A loss of reputation is directly related to a loss in brand value and, eventually, a decline in business. A business decline leads to the business shutting down. Research in marketing has shown that the response of a company to a data breach can help in preserving brand reputation. Customers and consumers appreciate a quick, transparent, and effective response to a data breach.
Companies need to establish strong data security policies from the get-go. This will help protect their consumer information and avoid cases of data theft in their companies. Additionally, it is crucial to be aware that cybercrime is on the rise. Therefore, it is necessary to be vigilant about data theft.