Businesses take note: Data breaches have a far greater impact than just potential fines.
With several high profile data breaches this year, federal regulators have been quick to propose data breach notification bills and heavy fines for organizations that fail to keep sensitive and confidential information safe.
The real concern for organizations that have experienced a data breach, however, should be customer confidence.
A recent article in the Tech Journal (techjournalsouth.com) delves into the effects of data breaches, using survey information to demonstrate how they affect customer loyalty and confidence.
The article highlights a recent survey by SailPoint Technologies which suggests global consumers have been losing confidence in companies due to the frequency of data security breaches.
“The widespread impact of data breaches like Epsilon and Sony PlayStation, where millions of consumers were impacted around the world, is making customers more cautious about conducting business with certain financial institutions and retailers,” said Jackie Gilbert, vice president of marketing and co-founder at SailPoint. “These companies obviously spent millions to recover from these data breaches, but the longer term and harder-to-measure costs will be the erosion of customer loyalty and decline in brand perception.”
The article goes on to relay how the lack of confidence is affecting consumer behavior: “a security breach at a financial institution or retailer can severely impact customer loyalty. Case in point: 16% of Americans, 24% of Britons and 26% of Australians said they would no longer do business with a bank, credit card company or retailer if a security breach occurred that potentially exposed their personal and financial information to theft.”
Although regulatory fines are painful, the loss of customers and business should really concern businesses. Organizations and Infosec Professionals (CIO's, CISO's, etc.) would do well to take note of these results.