Cyberattacks including ransomware, have become increasingly common, affecting organisations of all sizes and industries. Last year, ransomware was involved in 25% of all breaches across industries. Such attacks can lead to a range of physical effects, including the loss of data, systems going offline, and normal business operations halted. However, the effects of a cyberattack aren't just physical – they can also impact non-tangible aspects of an organisation's operations, including its reputation.
Reputation is a key asset for any organisation. It’s built and nurtured over time through various activities, including quality products and services, good customer relationships, and positive communication with stakeholders. However, when a data breach happens, it can have a significant negative impact on the established reputation, leading to a loss of trust with consumers, customers, suppliers, and shareholders.
· Brand Reputation
One of the most significant impacts of a cyberattack is the loss of trust from customers and consumers. When an organisation is hit by a data incident, the public may question the organisation's ability to keep their data secure, which can lead to a loss of trust and a reluctance to engage with the brand. This can result in a decline in sales and negate the significant efforts the organisation has invested in customer acquisition.
Furthermore, customers who are affected by a cyber incident may seek compensation for downtime or any other losses they have experienced. This can lead to a financial cost for the organisation and cause further damage to its reputation. An incident may also affect the market's perception of the organisation, resulting in a decline in its share price if publicly listed.
· C-level management reputation
The reputational damage from a cyberattack doesn't just affect the organisation's public image – it can also impact the reputation of its top executives. If a data breach leads to significant financial losses or a prolonged outage, C-level executives may be forced to resign, resulting in a loss of management trust from stakeholders. This is especially the case in instances where management has been slow to react to a cyber incident.
· Partner/supplier relationship reputation
The supply chain is critical for many organisations, and typically involves the sharing of sensitive data, such as orders and payment information. If a cyber incident were to occur, it could result in a loss of trust with partners and suppliers. If those stakeholders view an organisation too risky to do business with, it may lose its route to market, leading to a further decline in revenue.
A question that comes up repeatedly in my discussions with customers is what can their organisation do to manage its reputation in the event of a breach? Given the potential reputational damage that can result from a cyber incident, organisations need to take proactive steps to manage their reputation.
Here are the key steps that organisations can take to protect data stores:
1. Preparing for a cyberattack
One of the most critical steps in managing reputation is to be proactive to a threat. While most organisations will have implemented cyber security planning to prevent, detect and respond to cyber incidents. The plan must make specific provision for a crisis management response.
This involves a step-by-step framework for how stakeholders across the organisation will act in response to an attack. The plan should be assessed regularly to ensure that it is effective and that employees know their roles and responsibilities. This will help the organisation respond quickly and efficiently, mitigating the potential damage and helping to restore business operations.
Having clearly defined responsibilities and accountability can make a massive difference to the speed of response, and perceptions of how the threat was treated – which is a core element of maintaining the organisation’s reputation.
2. Planning for backups, recovery, and encryption
Planning how data will be protected and restored in the event of a cyber incident is an important part of managing the direct impact of an attack. Implementing a backup and disaster recovery plan is essential, as it can help the organisation quickly restore data and systems in the event of an attack. The average cost of downtime related to ransomware attacks is $8,662 per minute, often surpassing the cost of the ransomware demand itself. Therefore, planning can help to minimise the potential loss that can be incurred from downtime.
Data encryption also plays a particularly key role from a reputational point of view, as customers will be extremely sensitive to the risk of their personal data – such as social security number, identification, and financial information being leaked online. With encryption measures in place, the organisation can be quick to offer assurance to dispel fears about the accessibility of such data following a breach.
3. Develop a communication plan and emphasise transparency
In the event of a cyber incident, effective communication is critical. Organisations should have a communication plan that outlines how they will communicate with stakeholders. This includes those directly impacted by the incident, including consumers, customers, suppliers, employees, and shareholders. It also includes notifying regulators and media, both of which can have an impact on the longer-term consequences, such as fines for non-compliance and negative news coverage that can remain forever in the public domain.
It's important to be transparent with stakeholders about the situation. Informing the public about what happened, the impact and the measures taken to prevent such attacks in the future can help restore trust. When people hear of a cyberattack, their first thought is usually, "how bad is it?" Being transparent with the public can help alleviate their concerns and can even turn a negative situation into a positive one.
Cyber incidents such as ransomware attacks can have a long-lasting impact on an organisation's reputation, and it's essential to take steps to manage that reputation in the aftermath. The effects of such an incident are not limited to tangible losses, but also extend to intangible elements such as the loss of customer trust and the tarnishing of a company's reputation. This can lead to loss of business opportunities, partner relationships, and even impact C-level management. Therefore, businesses must have a robust reputation management strategy in place, including proactive planning and preparedness for cyberattacks.
In the eyes of stakeholders, there’s a big difference between those organisations that act promptly and transparently to an emerging breach, versus those that fail to convey the gravity of the situation. Being prepared for the worst-case scenario means organisations can ensure that they are prepared to manage such incidents. By doing so, they can alleviate issues and protect their reputation and the trust of their consumers, customers, partners, and stakeholders.
Seeking expert support can be crucial in mitigating the damage of an attack and restoring business operations as soon as possible. Find out how Veritas can help your business prepare for business continuity in the face of cyberattacks.