Data Breaches: Assessing the Impact on Company Reputation and Trust

This essay examines the detrimental effects of data breaches on a company's reputation, highlighting the erosion of consumer trust, financial losses, and potential impacts on the company's future. It emphasizes that data breaches can significantly damage a company's reputation, leading to a loss of consumer confidence and potentially impacting stock value. The essay also differentiates the impact on large organizations versus startups, noting that startups are particularly vulnerable. Mitigation strategies, such as implementing robust security protocols, authentication processes, firewalls, and VPNs, are suggested to reduce the risk of data breaches. The conclusion underscores the need for organizations to prioritize data security to protect their reputation and maintain consumer trust, particularly in an era where data breaches are increasingly common.

Running head: DATA BREACHES ON THE REPUTATION OF COMPANY
THE IMPACT OF DATA BREACHES ON THE REPUTATION OF THE COMPANY
Name of the Student:
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Author Note:

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THE IMPACT OF DATA BREACHES ON THE REPUTATION OF THE COMPANY
Introduction
The data breaching is the major issue for the security of the organization. All
organizations tries to keep the information of the organization and the stakeholder of the
organization safe and secure. However, due to the lack of the maintaining the security and for the
others security issues data breaches can happen in the organization (Sen & Borle, 2015). Both
the organization and the clients and stakeholders of the organization get affected due to the
breaching of the data. This can become a major security threat for the organizations and the
clients of the organization as the disclosure of the confidential and the sensitive information
happens due to the breaching of the data.
Thesis statement: The data breaching in the organization can put a negative impact on
the organization and can damage the reputation of the company.
Discussion
There are certain impacts the respective organization can face die to the data breaches in
the organization. All the impacts are negative of the organization which are affected from the
breaching of the data. Some of the impacts of the data breaching are-
Damage of the trust of consumers: The major effect of data breaching is that the
respective organization loose the trust of its clients and the other stakeholders (Martin, Borah &
Palmatier, 2017). It has been found out that the consumers are not interested to take the service
from that organization or interested to for the business with that organization which has suffered
from the breaching of the data (Kwon & Johnson,2015). The consumers cannot trust the
company or the organization who is not able to protect the data and the information of the

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THE IMPACT OF DATA BREACHES ON THE REPUTATION OF THE COMPANY
consumers. In this case , the organizations can lose their existing consumers (Chakraborty et
al.,2016). This can bring the financial loss for the company as well as the hampering the
goodwill of the company.
Financial loss: The another major issue that a company can suffer from the data
breaching is that the respective company can suffer from the financial loss. The breached data
can hold the confidential information about the internal processes of the company. Exploiting
those information in a certain level can make the company to lose the money (Kashmiri, Nicol &
Hsu, 2017). The negative impact is created about the company in the market. Generally, it has
been seen that in these cases , the stock value of the company in the share market goes down.
Impact on the future of the company: The data breaching can put the uncertainty about
the way organization is doing the business. These kinds of incidents make sthe organization to
find out the security threats in the system of the company. The managing of the effects of data
breaches can be possible for the large organization and it has been seen that they can somehow
convince their clients and the stakeholders about the effectiveness of the newly modified system
implemented after the breaching of the data (Rao & Selvamani, 2015). However, it has been
observed that the impact of data breaching is crucial for the companies or the organization which
have recently stated the business. These kinds of organizations are called startup companies. The
data breaching and the other kind of security threats have crucial impact for the startup
companies. Due to the breaching of the data these startup lose rapidly growing reputation in the
market very easily. After that convincing the clients and the stakeholders related to the company
become very tough for those companies. The startups, in that case lose the base of the doing
business in the market.

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THE IMPACT OF DATA BREACHES ON THE REPUTATION OF THE COMPANY
Mitigation of the data breaching: Breaching of the data can be mitigated in various ways. Certain
security steps and the security protocols can be implemented in order to prevent the breaching of
the data. Moreover the use of proper authentication and authorization processes in the system
and maintaining the network security by using the firewalls and VPN can enhance the security of
the system.
Conclusion
It can be concluded from the above discussion that there are certain negative impacts of
the data breaching. All the organizations and the companies are suffered from the effect of data
breaching. The organizations face the loss du to the data breaching mostly in the financial area
and they lose the confidence and the trust of the consumers on the respective organization. The
breaching of data is more crucial for the startups or the new business companies rather than the
big organizations. However, implementation of certain security steps can reduce the chances of
data breaching.

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THE IMPACT OF DATA BREACHES ON THE REPUTATION OF THE COMPANY
References
Chakraborty, R., Lee, J., Bagchi-Sen, S., Upadhyaya, S., & Rao, H. R. (2016). Online shopping
intention in the context of data breach in online retail stores: An examination of older and
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Kashmiri, S., Nicol, C. D., & Hsu, L. (2017). Birds of a feather: intra-industry spillover of the
Target customer data breach and the shielding role of IT, marketing, and CSR. Journal of
the Academy of Marketing Science, 45(2), 208-228.
Kwon, J., & Johnson, M. E. (2015, June). The Market Effect of Healthcare Security: Do Patients
Care about Data Breaches?. In WEIS.
Martin, K. D., Borah, A., & Palmatier, R. W. (2017). Data privacy: Effects on customer and firm
performance. Journal of Marketing, 81(1), 36-58.
Rao, R. V., & Selvamani, K. (2015). Data security challenges and its solutions in cloud
computing. Procedia Computer Science, 48, 204-209.
Sen, R., & Borle, S. (2015). Estimating the contextual risk of data breach: An empirical
approach. Journal of Management Information Systems, 32(2), 314-341.