High-profile breaches around the globe are putting consumers on edge and instilling a sense of mistrust that financial institutions and other businesses can deal with securing their sensitive information and data, according to two recent reports.
In the past year alone, Equifax suffered a massive breach which exposed the personally identity information of 143 million consumers in the US and Yahoo announced its 2013 breach ultimately affected all of its 3 billion account holders.
"The threat landscape is continually evolving," says Pieter Penning, a PricewaterhouseCoopers (PwC) Cybersecurity and Privacy Practice partner.
Indeed. Consumers are aware of cybersecurity threats, such as the emergence of ransomware, and remain skeptical that companies can ward them off in an attack or prevent a repeat occurrence post attack, according to reports from PwC and the BAV Group, which surveyed more than 2,000 Americans as part of their Consumer Intelligence Series: Protect.me, and a study by Carnegie Mellon University professor Rahul Telang and his student Sriram Somanchi, who issued a report Security, Fraudulent Transactions and Customer Loyalty: A Field Study.
These concerns could lead to consumers discontinuing their patronization of a business, the reports note.
"For financial firms, we know that they will lose customers if they are not proactive in reaching out to them [post attack]. For the other firms, the long-term implications are still not well documented," Telang says. "Of course, the short-term fallout is that firms incur significant costs in managing their reputation [post attack]."
The findings in the reports reveal consumers' attitudes toward the cybersecurity of the companies they deal with, and what organizations can do to retain their customers before and after a breach:
Majority of consumers worry about cyberattacks. The PwC report finds 69% of consumers believe companies they patronize are vulnerable to hacks and cyberattacks.
Lack control over personal information. Only 10% of PwC survey respondents feel they have complete control over their personal information.
Trustworthiness varies among industries. The cybersecurity of banks are perceived safe, 42%, compared with the marketing and advertising industry, 3%, according to the PwC report.
Willing to walk away. Companies failing to handle their customers' data responsibly may find 87% of their customers will take their business elsewhere, according to the PwC survey.
Businesses should disclose why a cyberattack occurred. Financial firms face a 3%-point increase in customer churn if they fail to explain to customers why the incident or breach happened in the first place, the Carnegie Mellon report states. Without this explanation, customers feel their future transactions remain at risk.
Reach out and compensate. Of all the steps a company can take to retain a customer after a breach, compensation was the highest, 27%, among PwC survey respondents. Carnegie Mellon's Telang also notes that if harm to a consumer is clear, reach out to them in a personal way and compensate them in either money or service to reduce the chance they will discontinue patronizing the business.
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