IT failures, threats to data security and cyber crime have an impact on businesses financially, but also indirectly through ‘reputational damage’. You may think that the situation is out of control, but there are steps you can take to minimise the damage and get you and your business back on track.
The news that a Morrisons employee was arrested for stealing payroll data including details of around 100,000 members of staff at the Bradford-based supermarket chain, is shocking. It was especially hard hitting as it came only days after Morrisons announced a £176m loss and profits warning. According to the BBC, the company is now ‘undertaking an urgent review of its internal data security systems’.
A recent study IBM Global Study on the Economic Impact of IT Risk, commissioned by IBM and conducted by Ponemon Institute, found that ‘business and IT disruptions that result from business continuity and IT security failures will cost organisations an estimated average total of $19.6m over the next 24 months.’
The study, which was carried out in July 2013, is reputed to be the largest independent research study of its kind to date. Ponemon Institute surveyed more than 2,300 business continuity specialists and IT security practitioners, from 20 industries across 37 countries. Respondents were asked to evaluate a list of six common threats and six common categories of costs. While human error was identified as the most likely common threat, reputation and brand damage was recognised as the ‘single largest potential cost’.
Reputation is a critical asset to any business. In today’s digital world, protecting the online reputation of your company or brand is just as important as protecting any other business asset. Interestingly, the IBM study found that around two-thirds of the respondents surveyed, believed that their leaders did not realise that business and IT disruptions could potentially damage reputation and brand image.
In November last year, an article in FT Magazine entitled ‘The Hacker Hunters’ reported on the cyber response team at PwC. Tasked with investigating digital issues, the group is said to look for hackers aiming to steal ‘secrets and money and damage the reputations’ of companies. The article makes reference to the fact that the ‘UK Cabinet Office estimates that the cost of cyber crime to the county’s economy alone reaches £27bn annually, while a White House white paper on cyber policy this year estimated that data theft to US businesses costs close to $1tn.’
Furthermore, according to a report by the Office of Cyber Security and Information Assurance (OCSIA) in partnership with Detica, which looks more closely at the cost of cyber crime in the UK found that the ‘potential for reputational damage is inhibiting the reporting of cyber crime’.
How successful a company or a brand is deemed to be is, in many cases, determined by its reputation. While reputation is hard to value or quantify, it can be managed in a strategic and thoughtfully planned way. If you are facing the consequences of IT failure, cyber crime or another issue of a similar magnitude, and you believe it is affecting your reputation online, please feel free to contact me for a confidential discussion. You may think that the situation is out of control, but there are steps you can take to minimise the damage and get you and your business back on track.
Contact Simon Wadsworth Reputation Matters to discuss online reputation management.
- Wm Morrison employee arrested after payroll data theft
- IBM Global Study on the Economic Impact of IT Risk: Understanding the economics of IT risk and reputation, making the business case for business continuity and IT security
- The Cost of Cyber Crime – A Detica Report in partnership with the Office of Cyber Security and Information Assurance in the Cabinet Office