Investors in a typical FTSE 100 company have lost at least $52.4 billion due to public domain cyber security incidents since 2013, according to a new study commissioned by IT consultant CGI and conducted by Oxford Economics.
The study found that companies’ share prices fall by an average of 1.8 per cent on a permanent basis following a severe breach, which costs them on average $120 million.
“The study shows a significant connection between a severe cyber breach and a company’s share price performance. It was found that, on average, a firm’s share price was 1.8% lower in the wake of a breach than it would otherwise have been in the week following an attack,” Ian Mulheirn, Oxford Economics, said. “However, in some cases the relative share price fall for affected companies was much higher, with one attack lowering the company’s valuation by 15%.”
Oxford Economics collected the data using the Gemalto Breach Index, which presents data breach statistics by date, location, and industry based on publicly disclosed security incidents worldwide. It examined 315 breach events in total with a focus on 65 “severe” and “catastrophic” breaches occurring since 2013 across seven global stock exchanges. It showed two-thirds of firms had their share price adversely impacted after suffering a cyber breach.
"Financial services experience the greatest burden in terms of impact, reflecting the high levels of regulation, the importance of customer confidence and the potential for financial fraud to be a facet of the breach," the report said.
According to the Global Cyber Security Market report, the market will be worth USD 170 billion by 2020. The advent of digital technologies for the collection, storage, analysis and distribution of information has created world of insecurity which raised numerous new opportunities in the global cyber security market. In the case of one major breach, for example, the most of the cloud based companies saw a 46 percent drop in profit the quarter after the breach occurred.
Cyber threat became a major challenge for startups and e-commerce companies which are completely based on cloud systems. According to research conducted, companies have invested more than USD 75 billion on cyber security in the past year with a further cost of around USD 450 billion on recovering from cyber-attacks.
Dr Andrew Rogoyski, vice president of cyber security services at CGI UK, said “companies that perform financial transactions tend to be targeted because of the potential for cyber criminals to make money out of them.
“We are beginning to see City analysts, venture capital firms and credit ratings agencies factor cyber security readiness into the way they assess firms – this is positive and should encourage boards across the world to treat cyber security as an enterprise-wide risk.”
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