A data breach can have a massive impact on a company’s share price, often causing slow growth and poor performance for years after the fact, according to a new report from Comparitech. A data breach hurts the company’s reputation, but recent breaches had less of an impact that older ones on company stock prices.
Full Answer
How does a data breach affect a company's share price?
A data breach can have a massive impact on a company's share price, often causing slow growth and poor performance for years after the fact, according to a new report from Comparitech. A data breach hurts the company's reputation, but recent breaches had less of an impact that older ones on company stock prices.
What happened to the stock price after the breach?
Even though the stock price went back up after the initial breach disclosure, the prices weren’t as high as they would have been if the breach hadn’t happened.
How long after a data breach will investors care?
The impact of data breaches also diminish over time, so investors won't be thinking as much about the breach four, five years after the fact. “ [W]e assume a data breach will have the greatest effect on share price immediately following the incident, and that effect will diminish over time,” said Bischoff.
Are companies numb to news of data breaches?
Companies are spending millions in litigation costs, efforts to restore brand loyalty, and refunds. However, even the most significant recent breaches had very little impact on the company’s stock price. Industry analysts have inferred that shareholders are numb to news of data breaches.
Do data breaches affect stock price?
For many of these incidents, the price drop was minor and recovery time was less than two weeks. But some have a larger impact: The 2017 Equifax breach, for example, kick-started a price drop that hit 31% a week after its disclosure.
How much does a data breach cost a company?
Year-Over-Year Global Cost of a Data Breach The same report found that the average cost of a data breach in 2020 amounted to $8.64 million. Contrary to worldwide trends in 2020, the U.S. saw a 5.49 increase in data breaches compared to 2019.
What are the top 3 data breaches?
Top 10 most significant data breachesYahoo data breach (2013)First American Financial Corporation data breach (2019)Adult FriendFinder Networks data breach (2016)Facebook data breach (2019)Target data breach (2013)MySpace data breach (2013)LinkedIn data breach (2012)Adobe data breach (2013)
How do data breaches affect companies?
Loss of Sales After a Data Breach Reputational damage also leads to a loss of customers and, in turn, a decrease in sales. When current customers lose trust in a business, they begin to look elsewhere. That might lead them to a rival who has not had a cyber incident.
What's the cost of a data breach in 2021?
US$ 4.24 millionAccording to the latest data breach report by IBM and the Ponemon Institute, the cost of a data breach in 2021 is US$ 4.24 million, this is a 10% rise from the average cost in 2019 which was $3.86 million.
What is an example of a data breach?
Examples of a breach might include: loss or theft of hard copy notes, USB drives, computers or mobile devices. an unauthorised person gaining access to your laptop, email account or computer network. sending an email with personal data to the wrong person.
What companies had data breaches in 2021?
In this article, we'll examine the top 5 security breaches of 2021 and detail the key takeaways for IT professionals.March – Microsoft Software Caused Data Breach. ... April – Facebook Data Breach. ... May – Colonial Pipeline. ... May – JBS Ransomware Attack. ... July – Kaseya Ransomware attack.
Has there been a data breach in 2021?
Nearly 50 million people in the U.S. had their sensitive health data breached in 2021, a threefold increase in three years, according to a POLITICO analysis of the latest HHS data. Health care organizations including providers and insurers in every state except South Dakota reported such incidents last year.
Who suffered biggest data breach in 2021?
The biggest data breaches of 2021Comcast (1.5 billion)Brazilian resident data leak (660 million)Facebook (533 million)LinkedIn (500 million)Bykea (400 million)
Which is a likely consequence of a data breach?
The long-term consequences: Loss of trust and diminished reputation. Perhaps the biggest long-term consequence of a data breach is the loss of customer trust. Your customers share their sensitive information with businesses like yours assuming that you'll have the proper security measures in place to protect their data ...
What are the risks of data breaches?
Some common types of risk are identify theft, discrimination and reputational damage to the people whose data has been breached. You need to find out what has happened in your situation and decide if it was the result of human error, a system error, a deliberate or malicious act or something else.
What are the consequences of a breach?
Naturally, the seriousness of the breach also affects the consequences. The common consequence is reduction of the contract price, remedy of the defect, compensation for damage and interest for delay. It is only possible to rescind the contract when the breach is fundamental.
What is the average total cost of a data breach in 2019?
$8.19 millionThe average total cost of a data breach in the U.S. for the companies studied has grown from $3.54 million in 2006 to $8.19 million in 2019, a 130 percent increase over 14 years. The Middle East had the highest average number of breached records, 38,800, compared to the global average of 25,575.
How much is a data breach fine?
Under the GDPR, the EU's data protection authorities can impose fines of up to up to €20 million (roughly $20,372,000), or 4% of worldwide turnover for the preceding financial year – whichever is higher.
Why do data breaches cost companies?
Other issues covered that may have influenced the cost were the root causes of the data breach, length of time it took the organizations to detect and contain the incident and estimated cost of business disruption and lost customers as a result of the breach.
How much did the data breach cost target?
The Ultimate Cost of the Target Data Breach In fact, it's estimated the company lost over $200 million. Retail data breaches are extraordinarily expensive, but no industry is safe.
What happens when a data breach breaks?
When news of a data breach breaks at a major organization, the aftermath can be chaotic. Executives will offer their apologies and the promise of free credit monitoring to those impacted; staff may be issued their marching orders; cybersecurity teams need to be pulled in and systems repaired, law enforcement must be notified, ...
Why does my stock drop?
A drop in stock value can indicate broken investor trust and be caused by cybersecurity incidents , especially when they reveal a lack of adequate care or security practices.
Short-term damage
Pinkerton examined some of the most egregious and well-publicized recent breaches, concluding that most will only cause stock prices to fall for a short period of time, while the real damage occurs in the boardroom.
More harm than good
For those in charge of cybersecurity, the prospect of losing your job – and damaging your own reputation – should be enough of an incentive to make sure your organization is doing its utmost to avoid data breaches.
Staff awareness training
One of the simplest and most effective ways to improve your organization’s cybersecurity posture is to invest in staff awareness. Staff are directly or indirectly responsible for the majority of data breaches, whether it’s because they’re falling for phishing scams, ignoring cybersecurity policies, or maliciously misappropriating information.
What happens when a company is breached?
When a data breach hits, the compromised company will scramble to minimize the after-effects of the incident. This includes overhauling security systems, notifying customers, and limiting damage not only to its bottom line, but also to some less tangible assets, notably brand reputation and consumer trust.
What are the consequences of breaches?
The consequences of incidents that compromise highly sensitive data, notably credit card and social security numbers, linger longer and inflict greater damage on share prices. Also, breaches weigh most heavily on finance and payment firms, whereas healthcare companies are more immune to such ‘side-effects’.
How Stock Performance is Impacted by Data Breach
No one on the internet can claim to be completely hack-proof, but the e-commerce websites particularly, face the greatest risks. No doubt, cyber attacks and information security breaches have severe and lasting effects on websites. But, does it affect the market capitalization of companies?
Findings
Well, the research took two years to complete. And here the results of the study depicted individually as well as generally for the firms under discussion. In our findings, we also found that the health sector was the most hit by data breaches (28.82%), followed by financial (13.5%) and tech sector (8.0%).
What Should You Do?
This study shows that the consequences of data breaches include stock market upheaval also, in addition to known out-turns like sensitive & confidential data theft, a vandalized website, etc.
When do shareholders react to breach news?
Therefore, shareholders only react to breach news when it has direct impact on business operations, such as litigation charges (for example, in the case of Target) or results in immediate changes to a company’s expected profitability.
How many people were affected by JP Morgan hacking?
bank in assets, JP Morgan Chase, announced that in August, hackers had accessed its security system and that approximately seven million small businesses and 76 million households had been affected by a data breach.
What are the concerns of consumers?
While consumers are rightfully worried that their personal information may be compromised, shareholders and companies’ management have a wider set of concerns, including loss of intellectual property, operational disruption, decreased customer trust, tarnished brand, and loss of investor commitment.
How much did Target lose in 2013?
The company lost a total of about $236 million in breach-related costs, $90 million of which were offset by insurance. A judge recently ruled that Target will have to defend itself against accusations of negligence by banks, credit unions and consumers when it came to preventing the 2013 security breach.
Can shareholders assess the impact of cyber attacks?
Shareholders still don’t have good metrics, tools, and approaches to measure the impact of cyber attacks on businesses and translate that into a dollar value. In most cases, at the time a security breach is disclosed, it is almost impossible for shareholders to assess its full implications.
What does Jepson say about hackers?
Jepson does say that hackers often target industries that are lower "tech-based" with limited IT budgets and cyber-security mechanisms in place. He also notes that there is money to be made in the aftermath of a major data breach.
How does Fischer mitigate financial loss?
Fischer says that companies can mitigate financial and brand loss by implementing a plan in a timely manner, and if a "long-term remediation" has been successfully demonstrated in the same timeframe. "Communication is an important part of handling the data breach - so much so that it is increasingly appearing in government legislation - ...
Do companies have to take stock price declines lying down?
There is some good news on the data breach and stock price front, in that companies dealing with breaches don't have to take stock price declines lying down. The data shows companies who aggressively respond to a data breach suffer lower financial losses.
Is it hard to predict data breaches?
Unfortunately, data breaches are extremely difficult for investors to predict, because there's really no such thing as companies that are at higher risk of data breaches, says Lance Jepsen, owner of Guerilla Stock Trading, in Clovis, Calif. "Take Target, for example.
What was the Exactis breach?
In June of 2018, Florida-based marketing and data aggregation firm Exactis exposed a database containing nearly 340 million records on a publicly accessible server. The breach exposed highly personal information such as people's phone numbers, home, and email addresses, interests, and the number, age, and gender of their children. This data exposure was discovered by security expert Vinny Troia, who indicated that the breach included data on hundreds of millions of US adults and millions of businesses.
What data was compromised by Equifax?
The data compromised included names, home addresses, phone numbers, dates of birth, social security numbers, and driver’s license numbers. The credit card information of approximately 209,000 consumers was also exposed through this data breach. The sensitivity of the information processed by Equifax makes this breach unprecedented, and one of the largest data breaches to date.
What happened to eBay in 2014?
Between February and March 2014, eBay was the victim of a breach of encrypted passwords, which resulted in asking all of its 145 million users to reset their password. Attackers used a small set of employee credentials to access this trove of user data. The stolen information included encrypted passwords and other personal information, including names, e-mail addresses, physical addresses, phone numbers and dates of birth. The breach was disclosed in May 2014, after a month-long investigation by eBay.
How many users were affected by MyHeritage?
MyHeritage, a genealogical service website was compromised, affecting more than 92 million user accounts. The breach occurred in October 2017, but wasn't disclosed until June 2018. A security researcher discovered a file on a private server containing email addresses and encrypted passwords. The security team at MyHeritage confirmed that the content of the file affected the 92 million users, but found no evidence that the data was ever used by the attackers. MyHeritage earned praise for promptly investigating and disclosing details of the breach to the public.
How many email addresses were exposed in Dubmash?
In December 2018, Dubmash suffered a data breach that exposed 162 million unique email addresses, usernames and DBKDF2 password hashes. In 2019, this data appeared for sales on the dark web and was circulated more broadly.
What was stolen from Yahoo in 2014?
Yahoo believed that a "state-sponsored actor" was behind this initial cyberattack in 2014. The stolen data included personal information such as names, email addresses, phone numbers, hashed passwords, birth dates, and security questions and answers, some of which were unencrypted.
How many Starwood guests were hacked?
Impact: 500 million guests. In November 2018, Marriott International announced that hackers had stolen data about approximately 500 million Starwood hotel customers. The attackers had gained unauthorized access to the Starwood system back in 2014 and remained in the system after Marriott acquired Starwood in 2016.
