What are the consequences of data breaches on share prices?

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Data Breaches: protecting share prices and investor confidence

Data breaches can have far-reaching consequences for companies, not only in terms of immediate losses, reputation damage, and regulatory inquiries but also in the long-term impact on a company’s financial performance. A recent study showed that the fallout from a data breach could significantly impact share prices and investor confidence.

The study found that in the third quarter of 2022, a total of 108.9 million accounts were breached, representing a 70% increase compared to the previous quarter. This was the equivalent of 14 accounts being hacked every second over the three months.

Long-term effects of data breaches on share prices

A report by Comparitech revealed that breached companies saw a low point approximately 110 days after a breach, with share prices falling by an average of -3.5%. The study also found that tech and finance companies were more vulnerable to the impact of data breaches, with share prices falling significantly following a breach. This highlights the importance of these industries taking extra precautions to protect sensitive data and ensure compliance with regulations.

Additionally, the nature of the data stolen also affected share prices. Breaches involving highly sensitive information, such as credit card and social security numbers, resulted in more immediate drops in share prices.

Protecting yourself from the consequences of data breaches

Cybercrime is expected to increase in 2023, making it imperative for companies to take action to protect themselves from the damaging consequences of a data breach. To protect share prices and investor confidence, companies must prioritise strengthening and maintaining cyber defences.

Implementing new approaches such as zero-trust can allow companies to better protect themselves from an increasingly sophisticated threat. Zero-trust means that nothing inside or outside the network is taken at face value.  By wrapping AI-powered software around every user and every element of the infrastructure, zero-trust ensures protection for businesses.

Companies must also ensure that any connections to third parties or supply chains are secure, as cybercriminals often gain access through a company’s partners. Neglecting supply chain security undermines investments in outward-facing security measures.

The Bottom Line

The long-term consequences of data breaches, combined with the threat to share prices and investor confidence, make it essential for companies to prioritise protecting sensitive data from cybercriminals.

Don’t let a data breach damage your company’s financial performance. If you’re interested in finding effective cybersecurity solutions to protect against data breaches and maintain investor confidence, then contact us today.