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Study: How Data Breaches Damage Brand Reputation

Experian/Ponemon Institute study says breached firms' brands lose 12 percent of value
Ever wonder how data breaches actually ultimately affect an organization's reputation? A new survey found that it takes an average of one year for a victim organization to restore its rep after a hack.

The Experian Data Breach Resolution-sponsored study of 850 executives found that data breaches have long-term effects on a brand's value: Victim organizations lost anywhere from $184 million to more than $330 million in the value of their brands. At best, their brands' value lost 12 percent of their value, according to the study, conducted by the Ponemon Institute, or up to one-fourth of the brand's value in some cases. This was based on an average brand value of $1.5 billion -- prior to the breach.

"The loss or theft of sensitive customer data, as our study quantifies, can have a serious impact on the economic value of a company's reputation," said Larry Ponemon, chairman and founder of the Ponemon Institute, in a statement. "We believe this study makes a powerful point about the importance of taking steps to reduce the likelihood of a data breach."

Of the 843 senior-level professionals who responded to the survey, 73 said their brand image and reputation are "inextricably linked," according to the report. Less than half said their companies' brand image and reputation could weather a data breach.

More than 40 percent said they had not had an incident response plan in place before they suffered a data breach.

"A solid reputation is a company's greatest asset, and it is therefore imperative that business leaders take precautionary steps to protect themselves, their customers, their employees and their intellectual property against data breaches," said Ozzie Fonseca, director at Experian Data Breach Resolution.

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