New Experian research has detailed the alarming extent to which UK businesses remain unprepared to respond to crises. Such unpreparedness could lead to numerous adverse outcomes, including data breaches directly affecting consumers.
In a blog posted on Finextra, Jim Steven, Experian’s Consumer Services Head of Crisis & Breach Response, outlined the findings.
Around half of businesses lack crisis response plans despite experiencing a crisis in the past 18 months
According to Steven, Experian’s research found that only around half of UK businesses have crisis response plans. Yet 78% of respondents admitted they had experienced a crisis that had impacted consumers in the past 18 months.
Of the businesses that had experienced a crisis:
- 78% had suffered a data breach involving consumer data
- 74% had fallen victim to an attempted or successful cyber-attack
- 73% had fallen victim to an attempted or successful ransomware attack
As with similar studies published in the last two years, Experian focused on how the COVID-19 pandemic had transformed business operations. Steven wrote that Experian wanted the research “to find out how organisations had adapted in this environment to improve their resilience, how they were organising their resources to better respond to future crises, and how they were mitigating impacts on consumers.”
Steven’s blog then outlined some of Experian’s additional findings.
Businesses are aware of risks but are consumers their primary concern?
Steven said all 500 business leaders that Experian surveyed agreed they were at risk of a crisis in the next 18 months. Specific concerns identified included:
- Health emergencies
- Ransomware attacks
- IT system failures
The business leaders also highlighted the areas they were most worried about were a crisis to occur:
- 39% were concerned about the financial impact on the business. Businesses with a turnover between £50 million and £99.99 million said a crisis could cost up to 43% of turnover.
- 36% were concerned about complaints or legal action resulting from a poor response to a crisis.
- 29% were worried about adverse impacts on consumers were they to mishandle a situation.
Business leaders are confident of their ability to respond despite lacking a plan
While over 70% of respondents to Experian’s survey said they had confidence in their business’s ability to respond effectively to a crisis, only:
- 50% have a crisis response plan
- 49% have a crisis response budget
- 45% said they were conducting regular risk audits
Steven wrote: “Until a crisis strikes, it’s difficult for leaders to comprehend the level of costs and resources required to respond effectively, and the extent of communication and resource management needed to minimise impacts. A swift and targeted response is key to minimising the financial, reputational and emotional damage caused. That’s why it is so important to recognise any gaps in advance and plan in advance to minimise damage.”
Businesses are not clear on who bears responsibility for crisis response planning
One significant roadblock to effective crisis response planning is potentially a lack of clarity around who handles it. While 41% of respondents told Experian it was the responsibility of the IT department, Steven said it was evident any effective crisis response would be a multi-department effort.
Sadly, Steven’s blog doesn’t outline what the other 59% said. However, it’s reasonable to assume that companies will have different response plans depending on their operational structure.
Both businesses and consumers recognise opportunities of a robust response
Cybersecurity incidents leading to consumer data breaches would never happen in an ideal world. While we all must accept these are a reality of the modern world – albeit there is much that we can do to prevent them – businesses and consumers recognise the potential for positive outcomes.
Among the business leaders Experian surveyed:
- 46% felt an effective crisis response would lead to increased customers and business
- 43% believed an effective crisis response would help them avoid reputational damage, irrespective of what led to the crisis itself
Experian also spoke to more than 2,000 consumers about their experiences of business crises over the past 18 months. The company found that positively dealing with such incidents would indeed reflect favourably on the business involved.
Among the consumers Experian surveyed:
- 46% said a positive response to a crisis would encourage them to continue being a customer
- 43% said a positive response would make them think favourably of the business
- 23% said they’d recommend a company to others on the back of an effective crisis response
- 16% said they’d post about their experience on social media
Steven closed by highlighting the importance of crisis planning, writing: “It’s clear that planning a consumer crisis response properly in advance brings many benefits to a business and its customers, and could ultimately be the difference between survival and failure.”
If you’ve been affected by a data breach, you may be entitled to compensation
If your data is put at risk because of a business not having adequate security systems or crisis response plans, you may be entitled to data breach compensation.
If your privacy has been compromised following a data breach, contact us for a free, no-obligation review of your potential claim.