Recent headlines demonstrate that data breaches are having a far more negative impact on the bottom line than anyone could have imagined, especially for publicly-traded companies. Record-breaking regulatory fines, mounting litigation costs and downward trending stock prices are real financial concerns and business risks.
Large data breaches cost an average of $347 million in legal fees, penalties, remediation costs, and other expenses, according to a report that analyzed the data breaches among public companies. There seems to be no end or limit in sight for some. Financial analysts estimate that Marriott’s data breach will cost the company a whopping $1 billion. And there is still more to learn over time.
Long-term impact
A recent study on cyberattacks and stock market activity found that data breaches create a negative shock to a firm’s reputation and its future growth prospects. After a cyber breach, companies likely suffer a short-term hit to share prices, and in the long run, pay lower dividends and invest less in research and development, leading to a loss of competitive edge.
The stakes are clearly high and long term, but across most industries, all signs point to…
