Cyber crime costs UK businesses £34 billion per year, but it may be the damage to a company's brand that is the real cost. New research into the opinions of UK consumers reveals that businesses may be understimating the damage to reputation that a cyber security incident can cause.
Findings from the new research by cyber security giant FireEye reveal that 38% of UK consumers now have a negative perception of companies that have suffered data breaches last year.
The new research directly contradicts the findings of the UK Government’s new 2016 Cyber Security Breaches Survey which found just 4% of UK businesses think their reputations have been harmed by data breaches.
The findings also reveal the potential long-term financial impact of data breaches on major brands. After last year's cyber attacks, 62% of consumers would now give less personal information to organisations that supply them goods and services, which could hit the revenues of organisations – from social media platforms to search engines – that rely on collecting detailed consumer data for advertisers.
> See also: The cost of TalkTalk's security breach has doubled to nearly £80 million
And the onus is on the boardroom: if a brand suffered a data breach caused by a failure of the boardroom to prioritise cyber security, 72% of British consumers say they would boycott the brand. A data breach linked to a lack of board-level attention was deemed less acceptable than if a data breach had occurred as a result of human error – with only 38% of consumers stating that they would be likely to stop purchasing if this was the reason.
Cyber-attacks and data breaches became almost a daily feature in the news last year, with many UK brands at the centre. This galvanised many company boards into action to limit the immediate financial fallout – by offering free upgrades or compensation to try and retain customers – but these new figures suggest the financial fallout from a data breach is often felt long after the initial attack.
Following the security breach on telecoms company Talk Talk last year, where around 156,959 customers had their personal details accessed by the hackers, CEO Dido Harding is still working hard to gain back the trust of her brand's customers.
TalkTalk lost more than 100,000 customers, and saw a drop in their share price, while rivals Sky and BT benefitted, adding 144,000 and 130,000 broadband customers respectively in the last three months of 2015.
> See also: If you TalkTalk, you should walk the walk: a case of social responsibility
'This survey shines a light on the ‘hidden cost’ of cyber attacks on businesses, with customers less likely to buy from companies with a poor reputation for security, and increasingly willing to take legal action against corporations if their data falls into the wrong hands,' said Richard Turner, President EMEA at FireEye.
'The findings from this survey show that people’s negative perceptions of brands can stick, long after the publicity has subsided, and that consumers affected by data breaches are increasingly pointing the finger at people at the top.'
'There are some key lessons here for board executives who are beginning to recognise why they should take a more active role in cyber security. It’s also interesting to see in these findings that consumers are increasingly valuing attention to data security and making purchasing decisions with this in mind. While data security has too often in the past been viewed by companies as a cost, it’s now presenting an opportunity for them to attract a new and growing type of customer who wants assurance that their data is safe when dealing with companies.'
