Do Data Breaches Hurt A Company’s Stock Value?
Over the last few years, conflicting reports have been released on whether data breaches affect the stock value of companies. The question at the center of this debate remains: “If my American business suffers a cyberattack, will its value plummet on Wall Street?” The Harvard Business Review issued a staunch “no” back in 2015, but new findings made by Comparitech are showing that there’s more to the story. Comparitech discovered that stock prices are lowered, both after the initial public reveal and throughout the years to come.
Comparitech’s July 2017 Report
Released on July 11th, Comparitech’s report matched up with earlier findings by the Ponemon Institute in March. Ponemon had announced that a company’s stock prices dropped an average of 5% immediately after the reveal of a data breach. This fall from grace was largely attributed to customer mistrust since 31% of consumers said they now avoided that company, while another 65% reported feeling a lack of confidence in them.
Comparitech took Ponemon’s results a step further. They profiled 24 American companies, who had suffered major breaches of over 1 million records, including Apple, Ebay, Target, and Yahoo. Their results showed a long-term, negative impact on share prices:
- Over the next 3 years after a breach, stock value did continue to grow, but at a much slower pace.
- Prior to these cyberattacks, the 24 businesses showed a 3-year growth of 45.6%, but afterward, this pace crawled to 14.8% within the same time span.
- Recent breaches have a more profound effect on stock value than older ones.
- Situations where personal data was compromised (i.e. SIN and credit numbers) caused bigger and faster dips in share prices.
What Companies Can Learn Here
The takeaway message from Comparitech’s report isn’t that companies should stop publicly revealing their breaches. Upstanding businesses have the obligation to keep their customers protected. This means notifying them if their personal data is compromised! Hackers have the tools to cause devastating, life-long damage through identity theft and fraud.
So, what can companies do? Prevention is always the best course of action. Companies across the USA should be investing in ironclad data protection services. Hire a professional hacker and see if they can get through your security. Ask members of a data protection team to find loopholes in your current system. There’s an abundance of preventative tactics, which are less costly in the long run than a stock-plummeting data breach.
Does your company want to improve its data management? Silverback Data Center Solutions is only a call away. Operating nationwide, we offer top-quality data services and staffing options to our valued clients. Contact us today at 1-888-245-2344 or by email, and one of our data experts will be pleased to assist you.