Friday, July 22, 2005

Bad security can affect 5% of your market cap

#129 When engaging with customers on risk assessments, we often struggle to quantify the effects of bad publicity surrounding a security incident. Well, as this market matures, expect security metrics to become more quantifiable.
Academic researchers have determined that negative publicity associated with a security breach impacting confidential information can cause an average market cap decline of over 5%.
Now according to the Privacy Rights Clearinghouse, in the past five months, over 60 highly publicized data breaches have had the potential to affect over 50 million people. Given the 5% market cap metric the potential downside of a publicised security incident is enormous.
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