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Brand Breached: How Data Breaches Erode Brand Value

Brand Breached 

In today's digital age, organizations rely heavily on digital technologies and big data to gain in-depth insights about preferences, needs, and journeys, among others. As a result, organizations have large amounts of sensitive data about their customers. However, this data may not always be safe. A data breach is a malicious attempt to access confidential information without authorization. Data breaches imply an inability to protect valued customer data and are essentially a breach of trust. So, it is vital that businesses understand and quantify the impact of data breaches on brand value.

By evaluating the impact of data breaches on brand value, businesses can effectively understand if their cybersecurity investments are in line with the risks they face. It enables businesses to look at cybersecurity as more than just cost to business or as a matter of compliance, risk reduction, and loss prevention. By understanding how data breaches impact businesses, it becomes possible to build digital experiences and systems that are secure by design. Read on to know more.

Impact of Data Breaches

The average global cost of data breaches in 2020 was USD 3.86 million! Data breaches were the costliest in the US with an average cost of USD 8.16 million as of 2020!  As far as industries go, security breaches cost the healthcare industry the most with an average cost of US 7.16 million!  

The cost of data breaches goes beyond non-compliance, legal, and escalation costs. Of course, businesses must spend hefty sums of money on escalation, legal fees, and payment of non-compliance and other fines. But the costs include two other major components - financial losses and brand value erosion.

Financial Losses Stemming from Data Breaches

One major component of the cost is the financial losses stemming from lost business. This includes revenue losses from downtime, crashes, etc. that occur during and after the data breach. The time taken to identify and contain the breach causes financial losses. Companies that take less than 200 days to identify and manage breaches can save up to USD 1.1 million as per research.

Impact of Security Breaches on Brand Value

Another major component of the cost of data breaches is brand value erosion. A recent study found that the top-100 most valued brands could lose USD 223 billion of brand value as a result of data breaches. The study further found that companies in some industries faced the risk of losing higher brand value as a percentage of their 2020 net income of the sector as a result of a data breach.

  • Luxury: USD 2.4 billion (115%)
  • Consumer Goods: USD 5 billion (114%)
  • Automotive: USD 4.2 billion (77%)
  • Financial Services: USD 2.6 billion (52%)
  • Technology: USD 29 billion (53%)

How Does a Data Breach Cause Brand Value Erosion?

Brand value erosion runs much deeper than the financial damage and short-term reputational damage caused by data breaches. It alters the way customers think about and engage with the brand.

Data breaches impact brand value in 3 ways:

  • Presence: A security breach can instantly tarnish a brand's reputation. It creates a negative impression about the brand and erodes its relative strength, especially in today's highly connected world.
  • Affinity: Representing the degree of customer connection to the brand, affinity impacts the way customers engage with brands. The news of a data breach makes customers wary of the brand and their level of engagement erodes significantly.
  • Trust: When customers divulge personal and other information to brands, they place an implicit trust in the brand. Tantamount to breach of trust, data breaches significantly dent brand image, customer trust and loyalty; they cause customer attrition.

Intellectual property, patents, financial records, customer and employee information, etc. lose value to shareholders and investors without adequate protection. Given the risks associated with the brand, they may walk away from investing in such brands. A good protection strategy does not guarantee the acquisition of new customers. However, it always ensures that you don't lose existing customers.

Preserve Brand Value: Implement Robust Cybersecurity Measures  

Data breaches can affect small and large businesses alike. Big players like Facebook, Google, and AWS have ample resources and technological might to face the costs related to data breaches. But, SMEs may even be more susceptible to data breaches and not be equipped to carry the weight of the data breach impacts on their business. Investing in robust cybersecurity solutions equips businesses to prevent and/or minimize the impact of security breaches.

  • Align your digital, business and cybersecurity strategies.
  • Cybersecurity must be a top management mandate and not just the responsibility of CISOs and security teams.
  • Modernize cybersecurity with latest technologies including cloud computing, automation, AI-ML and so on.
  • Proactively protect digital assets, data and users through robust identity and access management, data security and privacy protection measures.
  • Robust vulnerability management with the help of automated scanners, intuitive WAF, security audits and pen-testing by certified security experts.
  • Continuously upgrade your defenses to face the growing threat landscape.
  • A well-thought and robust incidence response plan.


In the age of digital transformation where digital technologies and big data play such a crucial role in driving customer experiences and business outcomes, robust cybersecurity like that provided by Indusface, is a brand differentiator. Businesses must keep their customers' safety in mind and forestall data breaches and recognize malicious intent. Is your business equipped to stay ahead of your competition on the cybersecurity front?


Published Thursday, August 26, 2021 8:02 AM by David Marshall
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