Once a data breach is reported, people who are fearful quickly become sensitive towards the size and scope of the breach than those who get angry, finds a study led by Indian-origin researchers. The findings also extend to the stock market where a company’s stock price can be influenced by the size of the breach when the news coverage emphasizes fear, rather than anger.
“The emotions of fear and anger will elicit different reactions. In the wake of a data breach, we wanted to explore those different reactions and see if people acted to protect themselves or directed feelings toward those responsible,” said Subimal Chatterjee, distinguished professor in marketing at Binghamton University in New York.
Chatterjee partnered with Sumantra Sarkar, assistant professor of management information systems and others to conduct three studies to get to their findings.
Two of the studies surveyed how consumers reacted to the scope of a data breach. They found that only the customers who felt fear after a breach were sensitive to the size and scope of the breach, while scope didn’t matter to angry consumers.
“Fearful consumers were sensitive to knowing, for example, if the breach only affected 100 customers or 10 million customers, and we found that the larger the scope, the larger the reaction,” said Chatterjee.
Meanwhile, angry consumers didn’t care if it was 10 customers or 10 million customers.
“Their focus wasn’t on the scope. They were directing their focus and anger on the perpetrator,” Chatterjee added.
A third study examined 12,000 news stories about data breaches. Testing for keywords that suggested either a fearful or angry response in the coverage, the researchers then compared the findings to stock prices for affected companies at the time of the coverage.
They found that the stock market reacts similarly to how consumers react: Fear makes the stock market sensitive to the scope of a data breach, while anger makes the stock market insensitive to the scope of a data breach.
Easing fears in the wake of a data breach should be a priority, the researchers said. They also recommend being extra careful about how you communicate the scope of the data breach, as fearful customers will be very sensitive to the size of breaches.
“If you have 500 million customers that were affected by a breach, but it only represents around 16 per cent of your customer base, you may want to focus on that smaller number in your communications to minimize the threat to fearful customers,” Chatterjee noted in the paper published in the Journal of Business Research.
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