Data breaches can scare away investors

Mar 05th, 2013 / Category: Email Encryption


By now, the negative consequences stemming from data breaches are fairly well known. Companies that are found to have failed to adequately protect customer information may face fines from regulatory bodies. Intellectual property lost in these events may hurt a firm's ability to compete in its industry. Perhaps most importantly of all, a company that experiences a data breach will have a tarnished reputation, leading many consumers to avoid this firm for fear that their own data would not be safe in the company's hands.

All of these consequences are real and serious. However, this is not an exhaustive list. Recently, a survey highlighted an additional, major reason why companies should invest in secure file sharing solutions: the risk of scaring away potential investors.


Investor worries
CSO reported that the study, conducted by Zogby Analytics and commissioned by HBGary, included more than 400 investors. It found that nearly four-fifths of respondents would be either somewhat or very unlikely to invest in a company that is seen as having a history of being targeted for cyberattacks. More than two-thirds of respondents felt this way in regard to a company that had experienced one or more data breaches.

Participating investors were particularly wary of firms that had experienced data breaches or cyberattacks and not taken sufficient steps in the wake of these events to improve security. Two-thirds of respondents considered a company's response to these incidents more important than the fact that the events transpired in the first place.

"Investors want to see more openness and transparency in a company's process, response, even their investment in cyber security," said Jim Butterworth, CSO for HBGary, according to the news source.

The survey found that when it comes to the consequences of data breaches, investors were more concerned with the potential theft of customer information than the loss of intellectual property.

"That's probably because the tail on liability for the loss of consumer data is probably a lot longer and much more unknown than the loss of intellectual property," explained Ken Silva, senior vice president of cyberstrategy at HBGary's parent company, the news source noted.

Solutions available
Considering these investor attitudes, it is obvious that firms need to take steps to demonstrate a commitment to security, especially in the wake of a data breach. One of the most powerful options available to firms is investing in secure file sharing solutions. By doing so, organizations can ensure that emails sent to and by employees are protected at all times, eliminating the risk that attached files and data will fall into the wrong hands.

This is particularly critical because one of the most common causes of data breaches is employee use of insecure data sharing methods, such as Dropbox and low-grade email services. Because employees must share so much information, they often turn to these easy-to-use solutions. To put a stop to this trend within the organization, companies must invest in secure file sharing services that are just as easy to use but far better protected. By doing so, and revealing these steps to the public, a company can both secure its information and reveal its commitment to data protection.