Social media turns cyber security crises into catastrophies – study

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DCU researchers find Twitter most toxic network for company share prices

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19 December 2018 | 0

Increased social media exposure, particularly on Twitter, adversely affects the share price of firms who’ve experienced a data breach, according to a study by researchers based in Dublin City University.

The study looked at 87 individual breaches across 73 publicly listed US companies over a four year period, including this year’s Google, Facebook, British Airways, Under Armour and Marriott group incidents. These breaches exposed a range of personal information such as email addresses and passwords through to credit card details and passport numbers.

The analysis found that social media exposure can exacerbate the negative impact of data breach announcements and increase the cost of these breaches, with an average additional decrease in stock price of 1.2%.

The effect is even more pronounced when a firm discloses a breach via their Twitter account (a further decrease of 5.2% in stock price), increases their number of tweets over the event period, and has a large following on Twitter.

It also found that timely communication and disclosure of a breach can reduce the potential harm for firms that have quite low-visibility with traditional media like newspapers. The impact for these firms is positive as social media offers them an effective channel to disseminate information that cannot be disseminated through more established channels.

Dr Pierangelo Rosati, DCU Business School, said: “Social media has the expectation of instant feedback and meeting that expectation is incredibly difficult in midst of a crisis, and this creates a significant amount of pressure. The number of tweets or comments can be overwhelming. Also, once bad news goes viral, it is very hard for companies to keep control of the information flow. In the context of a company crisis, this may be particularly detrimental and worsen an already serious situation.

“There is a generalised positive view on the adoption of social media for firms’ communications. This study shows that communications departments and press officers should be more aware of the downsides and negative aspects present when it comes to crisis management and allocate adequate resources to manage it.”

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