Greater Focus on Privacy Pays Off for Firms
Privacy-mature companies complete sales more quickly, have fewer and less serious breaches, and recover from incidents faster, according to Cisco’s annual survey.
Companies that invest in privacy see an average return of 270% on their investments, with seven out of 10 companies seeing significant benefits from their privacy expenditures, according to an annual survey published by Cisco today.
In addition, more mature companies — as measured by a five-point accountability score — saw greater returns on their privacy investments, with high-scoring companies seeing an average benefit of 3.1 times return, compared to low-scoring companies, which saw an average benefit of 2.3 times return, according to the “Cisco Data Privacy Benchmark Study 2020.” The report, based on a survey of 2,500 security professionals familiar with their companies’ privacy practices, underscores that privacy programs are no longer just about avoiding fines but about building trust with customers, says Robert Waitman, director of privacy insights and innovation at Cisco.
“Privacy is not just about being minimally compliant with the laws, which have been changing and becoming more comprehensive. We are seeing other business value from our privacy investments,” he says. “Companies that made privacy investments saw fewer breaches, less costly ones, and less down time. That’s not a coincidence.”
Privacy and data security has grown to become an enormous issue for companies. The European Union’s General Data Protection Regulation (GDPR) has cost companies significantly: British Airways faces a £183 million (US$240 million) fine for website flaws that led to the harvesting of information on a half-million customers. Hotel chain Marriot also faces a significant fine — £99 million (US$130 million) — for a breach that affected 500 million guests of subsidiary Starwood Hotels.
Overall, 82% of companies had a breach in the past year, according to the survey.
Yet businesses are just beginning to see mature privacy practices as a competitive advantage, Waitman says.
“Companies who may be taking the minimalistic approach, who are looking to just avoid fines from GDPR or other private actions and legislation — that is not the right approach,” Waitman says. “This is about enabling and building trust and loyalty with your customers to provide the business value that comes from having your privacy act together.
Cisco published the survey the day before World Privacy Day, Jan. 28, a decade-old holiday that focuses on promoting privacy and raising awareness of the issues around storing people’s data. The survey found that the largest benefits accrue to companies in the UK, with a 3.5 times return, and Brazil and Mexico, both with a 3.3 times return. Companies in India benefit the least but still estimated that the average return for their firms were 1.9 times.
Interestingly, the relative benefit from privacy investment does not change for small companies as compared to large companies. Small firms may have less need for comprehensive privacy programs, but they also tend to spend much less than larger companies.
“Small companies spend a little, get a little, and large companies spend a lot, get a lot,” Waitman says. “The ratio is kind of similar.”
The company found that large enterprises with 10,000 or more employees spent $1.9 million on privacy, and small companies of less than 500 employees spent $800,000, on average. More than 40% of businesses see benefits of more than double the amount spend on privacy efforts, according to the study.
The study’s findings extend Cisco’s 2019 privacy report, which found GDPR-ready firms had fewer data breaches. Firms prepared for the EU privacy regulations exposed an average of 79,000 files during a breach, compared to 212,000 files for companies not compliant with GDPR.
The reports are based on survey responses and security professionals’ estimates of the benefits of privacy programs.
In the end, companies still need to focus on serving their customers need rather than collecting data indiscriminately, Cisco’s Waitman says.
“Legislation has provided power back to the people in terms of controlling their data, to some extent,” he says. “The No. 1 complaint of consumers right now is that they do not know what is going on with how their data is being used by the people they share it with.”
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