Stock Market Suffers After Data Breaches

Stock Market Data Breaches

The latest data from research firm Comparitech shows that organizations who suffer data breaches continue to suffer in the stock market well after the breach.

After a breach, there are many costs incurred by organizations attempting to clean up the mess. Cost of investigations, communications, public relations, legal fees, and customer notifications are just some of the expenses incurred. The average cost per record is $233.

But one cost isn’t factored: the impact a data breach has on the stock market price. In previous years, the consensus was that stock takes a dip upon the news of a breach but then comes back.

However, newer data shows a slightly different story that organizations need to pay attention to. The dip/recovery story is true, but the stock continuously underperforms against the NASDAQ.

Here’s the timeline of post-breach share-price decline:

  • +14 days – Share prices fall 2.89% on average and underperform the NASDAQ by -4.6%
  • +1 month – Share prices rebound and catch up to NASDAQ performance
  • +1 year – Share prices grow 8.53% but underperform the NASDAQ by -3.7%
  • +2 years – Share price rise 17.78%, but underperform the NASDAQ by -11.35%
  • +3 years – The share price is up by 28.71% but down against the NASDAQ by -15.58%

So, while stock market will bounce back to pre-breaches values, ground is lost that will never be regained. The stock price is only one factor that an organization should remember when it comes to making security-related decisions; the organization should also look at its whole security footprint as well.

Organizations need to prepare themselves against data breaches with a layered security strategy that protects the organization as a whole. Security solutions address the perimeter of organizations infrastructure, while security awareness training addresses the user’s willingness to be fooled by phishing scams and social engineering tactics. Contact us to get your customized security awareness training program.

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