Although many organizations expect data breaches to damage their reputation, the negative effect on a company's financial performance is short-lived, according to a Comparitech study.
Comparitech, a U.K.-based research firm, analyzed 24 companies' share prices in the days following a data breach. Here are five findings:
1. About 14 days after a company disclosed a data breach, share prices hit a low, underperforming by 4.6 percent.
2. On average, share prices dipped 2.89 percent 14 days after a company disclosed a breach.
3. One year after a breach, companies' share prices grew 8.53 percent on average, but underperformed by 3.7 percent. Three years after a breach, companies' share prices were up an average of 28.71 percent, but underperformed by 15.58 percent.
"Stock prices suffer following a breach, but perhaps not as much as one might assume," reads the Comparitech report.
4. Finance and payment companies saw the largest drop in share price performance following a breach, while healthcare organizations were least affected.
5. Breaches that leaked sensitive information, such as credit card and Social Security numbers, saw larger drops in share price than companies that leaked less sensitive data.