The Reputation Impact of Data Breach

[Editor’s note: Thank you to Simon Parker of Minerva Security for sharing this guest post on how losing private data reflects on your company’s reputation.]

Data breaches happen alarmingly frequently these days for a lot of reasons. Some companies are not willing to invest in the infrastructure that would make data breaches less likely to happen. There is also the fact that technology moves so quickly these days that even the most highly priced and sophisticated technical departments can’t always avoid data breaches. Some people however argue that data breaches are inevitable.

One way or another, it’s important for businesses to keep in mind how data breaches will affect them at the end of the day. Company security is no doubt important. A data breach involving company data can be disastrous. However, there is some genuine disagreement about how much an accident like this can affect a company in the long run.

The Consequences of Data Breaches

It should be noted that a lot of large and very popular companies have experienced data breaches in recent years. Sears, Target, Sony Pictures Entertainment, and a lot of other companies have had huge data breaches. These companies are still very popular and they’re still very much in business. A huge data breach is certainly not a guarantee that the customers are going to abandon a company in droves or that a company is going to suffer a blow to its reputation that is guaranteed to close it down.

There is also the fact that some of the consequences of a data breach appear to be temporary. It is true that data breaches can make the prices of stocks go down. However, the stock market does have a tendency to recover in many cases. This is a universal with the stock market. A lot of people will panic when a stock goes down, trying to sell their stocks in the process. However, these same people will usually be all right in the long run if they just wait patiently for the stock market to recover. The stocks associated with some of the largest and most popular companies in the world are rarely in any trouble.

It is true that customers do demonstrably care about the data breaches of a company. Customers have said repeatedly on opinion polls that they are very interested in whether or not a company has experienced a security breach on that level. They will usually talk about the fact that they will no longer trust a company as a result of a data breach on that scale. Some customers will break off their loyalty to a particular brand after something like that has happened.

Then again, large companies do often have the cultural penetration and the capital to be able to withstand something on that level. The smaller companies that experience even minor data breaches might not be as lucky. There are different ways of assessing the situation in order to figure out if a company is ultimately going to suffer as a result of a data breach. The larger and older the company is, the more likely it is that they can bounce back from something on that scale. However, larger and older companies should not feel as if they’re in a situation where nothing can happen to them.

The news of a data breach will travel quickly today as a result of social media. Many customers will hear about it and many of them will panic as a result. Some of them will automatically withdraw support for a company as a result. Security standards for companies may have gone up, but in many ways, all companies are going to be more exposed than ever in the Information Age.


A security problem involving the loss of company data can be hugely problematic. Some customers will turn away from a company. A company will lose money in the short term and their stock prices will go down in almost all cases. The question of whether or not that same company can recover is harder. Some companies do demonstrably recover in the wake of a data breach. Others never recover after the data breach happens. The damage to a company’s reputation is very difficult to predict, but there is certainly a chance that a company will be associated with a data breach forever. No company should take that risk.

This article was written by Simon Parker. Simon Parker works for Minerva Security, a company dealing with commercial business security and fire alarm systems.