Corporate Reputations and Sketchy Security
October 7, 2020
Cyber attacks are on the rise not only for individuals, but also for businesses, hospitals, banks, and other organizations. While organizations dedicate entire departments to cyber security, they still run the risk of their reputations being harmed. Daiji World explains more about threat
In the article “Reputational Risks From Cyber Attacks On Rise As Episodes Become Public: Moody’s.”
Consumers want reliable organizations to purchase goods and services from as well as manage their health and finances, but if organizations become cyber attack victims their clients lose trust in them. Moody’s Investors Service reported on the topic and said companies that rely heavily on their reputations and/or it is easy for their clients to switch to a competitor suffer the most from cyber attacks.
Organizations avoided disclosing cyber attacks in the past, because they did not want to further damage their reputations. Bad actors, however, enjoy bragging about their conquests and also want their victims to squirm in a public forum, so they announce their attacks online. New laws also require organizations to notify clients if there is a breach. Moody’s also wrote:
“’Damaged reputations can result in increases in the cost of capital, regulatory costs and additional costs for attracting and hiring talent. Companies with damaged reputations may also lose the support of customers, investors and other counterparties, causing a reduction in revenue…
“Besides, the report cited that companies with lower customer bargaining power or confidence-sensitive business models have more exposure to cyber-related reputational risks.’The effects vary, with acute financial consequences for some companies and little or no impact for others. Companies can employ various strategies to reduce customer churn and limit reputational harm, although these strategies can be expensive or frustrate customers,’ the report suggested.”
Ransomware tactics are still preferred by bad actors. Organizations only pay the ransom if they are publicly called out, while others do not have a choice due to the sensitive nature of the data.
In the future, organizations must budget for bigger cyber security departments and insurance for ransomware attacks. Insurance companies probably already have.
Whitney Grace, October 7, 2020
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