Disclosing a breach? Coordinate it with release of good news – study

Christopher Escobedo Hart writes that a well-handled breach can actually improve a company’s bottom line.

recent study goes a step further, suggesting that if handled well a data breach can actually help the bottom line.  This counter-intuitive conclusion, conducted by Sebastian Gay at the University of Chicago, is based on data from breaches occurring between 2005-2014.  The paper finds that “firms manage to avoid the full negative effect of a privacy breach event disclosure by releasing on the same day an abnormal amount of positive news to the market.”  In other words, sometimes companies have maintained a store of “good news” that they bundle together and release at around the same time that they disclose a data breach, which not only offsets the negative effect of the bad news of a data breach, but actually increases the bottom line.

Read more on Foley, Hoag Security, Privacy and the Law.

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  1. IA Eng - October 19, 2015

    Somehow, I just don’t feel the love on this topic. I would think, if there is a breach, I’d want the company to focus on controlling the bleeding from the breach, vice making it look like the breach was a low priority or the breach is low low or little concern to the staff. A breach and release of good news is as if they are trying to cover up the breach, or invite new clients while the corporation is in a state of uncertainty or unstable.

    Depending on the severity, perception is everything. A breach is always going to drum down any positive news in my opinion. Its best to release the good info AFTER the dust has settled from the breach. Then it will appear as if the company will stay afloat and upright since good positive things are coming out about the company.

    On the other hand, how many times have companies tried to drum up a positive campaign after a breach to promote the lack of revenue while the company is in a lull, or state of flux? Sure, there are the loyal customers, and the ones that will almost immediately ditch the company after a breach.

    For example, lets use a popular hotel chain that offers points for staying with them. I now see more triple and double reward point offers and special offers in general. Even with a recent breach event that stung the Point of Sale devices in the stores, bars and eateries in the hotels, they are still pretty popular and have a huge loyalty base.

    I honestly think people like deals over any sort of breach complexity issues. People like to take advantage of a deal, and will briefly contemplate the risk associated with providing, or continuing to provide PII to the breached entity. Same day breach notifications and good news releases seems like a cover up, and almost like an act of desperation as they brace for the eventual waves coming from the breach costs.

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