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Don’t Let Data Theft Cripple The Price Of Your Company Stock

We found this articles on mediapost’s marketing dailyCMO Council Finds Link Between Data Breach and Brand Trust

HEIGHTENED PUBLIC AWARENESS AND MEDIA attention have created a direct link between personal data security, brand reputation, and stock price. Yet only 30 percent of marketers have any crisis containment plan for security break-ins or failures.

That is the finding of a new study about data security and brand trust scheduled for release today from the CMO Council. Conducted with the Opinion Research Co. and the Zyman School of Brand Science at Emory University, the study involved consumers, executives, and marketing professionals.

While some 80 percent of top marketers polled registered a growing level of concern, there is a disconnect in what they believe and what is being done, the study reports. For some 60 percent say security has not become a more significant theme in their company’s messaging and marketing communications. A full 27 percent don’t even know if their company has a crisis containment plan.

“There is a real opportunity for marketers to differentiate themselves by talking about their security protection,” says Scott Van Camp, editorial director of the CMO Council and author of the study.

Factiva, which sponsored the research with software security maker Symantec Corp., tracked more than 17,000 distinct articles written on security breaches over a 16-month period.

The most surprising finding, says Van Camp, is how unprepared marketers are to deal with what is surely an inevitable part of doing business in today’s connected environment. “There needs to be a lot more preparation,” he says.

Of more than 52 million individual account records placed in jeopardy in 2005, more than 9 million Americans were victims of ID theft, with cumulative losses totaling more than $54 billion–a per-victim average of $5,885, the report states.

So far this year, at least 30 million more cases of compromised data have occurred, according to the Federal Trade Commission.

Researchers from Emory University also found that on average a company loses from 0.63 percent to 2.10 percent value in stock price when a data breach is reported–equivalent to a loss in market capitalization of $860 million to $1.65 billion per incident.

There is the inside job and the what? Outside job. The outside job is the break in, the burglary or the hacking and cracking of your computer systems in order to steal your valuable data, intellectual property, and proprietary information. While certain security systems can help prevent the outside job, Corra believes the inside job should always begin with a background check. Every new job candidate should be subjected to a rigorous background check and perhaps even your current employees. As reports show, perhaps as many in four in ten are willing to steal. It would stand to reason they would steal more than pencils and staplers, preferring valuable data and proprietary information that could make them some real money.

Frankly, in today’s world you have to be crazy not to require background checks for everyone you hire. If you are not crazy, then you must exist in a glass bubble in a fantasy world where there is no crime nor duplicity. But here on Earth as many as thirty percent of the failing businesses fail because of employee theft. Then there are the other little things for which you are liable and subject to loss, like substance abuse and violence in the work place.

So before you see your stock take a dive and your company embarrassed by glaring headlines that announce how your data has been compromised, tighten up in this age of Homeland Security. Run a comprehensive series of bankground checks, ranging from criminal and civil, through credit and driving. Bad credit risks are often more susceptible to outsiders wanting a shot at your valuable data. Substance abusers? Well, you can do the math.

Check them out before your hire.

By Gordon Basichis

Gordon Basichis is the Co-Founder of Corra Group, specializing in pre-employment background checks and corporate research. He has been a marketing and media executive and has worked in the entertainment industry, the financial, health care and technology sectors. He is the author of the best selling Beautiful Bad Girl, The Vicki Morgan Story, a non-fiction novel that helped define exotic sexuality in the late twentieth century. He is the author of the Constant Travellers and has recently completed a new book, The Guys Who Spied for China, dealing with Chinese Espionage in the United States. He has been a journalist for several newspapers and is a screenwriter and producer.