Loss due to data breach could cost brands $93 bn, hurt trust: Study

The world’s top brands risk losing at least $93 billion due to data breach, said a study on Tuesday representing between 4-9.6 per cent of companies’ cumulative value.

The study, which is called ‘Invisible Tech, Real Impact’ and was done by Interbrand India and Infosys, found that there is a long term impact of data breaches on brands across sectors. At worst, data breaches could cost brands $223 billion.

The study, the first of its kind, said customers are willing to pay a premium for a brand to stay loyal. This has two implications: on the part of the consumers, it implies a quid pro quo –sharing personal information with brands for a personalized experience in return. On the part of the brands, it means that the real and the virtual have to coexist in creating this unique experience. This is not just true for digital or tech brands like Google, Amazon, but also brands that were more ‘offline’ focused.

For instance, it is estimated that the amount of data shared online at the beginning of 2020 was 44 zetabytes (1 zettabyte is a trillion gigabytes).

Ameya Kapnadak, chief growth officer at Interbrand India, said that the study evaluated parameters like financial value of the company, role of the brand and strength of the brand. He also said that though a affects a brand and its perception holistically.

“There are three factors of particular interest that a breach directly impacts; presence, affinity and trust. At the most basic level, a instantly creates negative about the brand. This can create a negative perception of the brand in the social media world. This impacts the presence. In fact, we believe that the presence score is dented for every brand regardless of whether it is a digital or a physical brand,” he said.

The second significant impact that a breach has is on affinity. As the of spreads, customers might either stop engaging with the brand or reduce it. In Interbrands’s estimate, breach might impact affinity scores between 0.5 points to 2 points, depending on the extent to which consumers engage with them digitally.

The most significant of breach is on trust. It is the heart of any strong relationship. “The issue of cyber security is real and important. Though we all know it has its impact to quantify it financially was difficult. This report talks about that and also how other business segments should embrace security. We need to bring more deeper commitment to this conversation,” said Vishal Salvi, chief information security officer and head cyber security practice, Infosys.

The report said that traditionally bank brands that handle large amounts of customer wealth may see up to 16-17 per cent of their brand value at risk.

Technology brands also have between 9 per cent and 12 per cent of their brand value at risk. However, in terms of the absolute number, this value at risk is the highest across industries. The largest of tech brands, for instance, might have up to $29 billion of its value at risk in the event of a breach (Facebook, in fact, lost almost 12 per cent of its brand value in the wake of bad press and regulatory pressures). This in many ways represents the ubiquity of these brands in our everyday lives, with customers willingly sharing vast amounts of personal data with them, said the study.

That ubiquity is also the reason these brands have such astronomical brand values. In fact, technology as a sector accounts for the lion’s share of the cumulative value of the top 100 brands.

Traditional B2B brands, though not directly interfacing with the end customer, are equally at risk. Business dervices brands collectively have between 382$m and 3.5$b at risk. That represents, on an average, 9 per cent to 11 per cent of their brand value, and could be as high as 63 per cent of their net income. For new-age brands that have been born in the digital-age, the value at risk can be as high as 111 per cent of their net income. The primary reason for such high values at risk is the extent of customer data that these brands hand

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