Equifax Downgraded Over Data Breach
For the first time, a data breach has triggered a financial downgrade…
An article review.
If you’ve been following our blog–or just been watching the news–for the past couple of years you’re no stranger to coverage of the massive data breach suffered by Equifax in 2017. While much of this coverage has focused on the impact to consumers, a new story submitted by our friend Wes Pollard reveals the damage done to Equifax itself: its ratings outlook has been downgraded by Moody’s based upon the fallout from the breach–a first for the industry.
Factoring in to the downgrade is a nearly 700 million dollar charge reported by Equifax in the first quarter of this year, related to regulatory fines and class-action lawsuits related to the breach. In addition, Moody’s estimates that Equifax could spend 400 million dollars both this year and in 2020 to upgrade its infrastructure and implement security measures.
While it isn’t likely that your organization would see over a billion dollars in costs related to a data breach, the downgrade helps to underscore the significant, lasting impact such an event can have. Even past 2020, analysts at Moody’s estimate that Equifax will face higher costs than it would have otherwise as it increases cybersecurity related spending…and they’re not alone: cybersecurity related spending is expected to rise for all companies that handle large amounts of sensitive data, as firms try to avoid becoming the next Equifax.
Equifax may be the first company to be downgraded due to a breach, but they’re not likely to be the last. Indeed, Moody’s and other reporting agencies are working to include cyber risk in their credit ratings, which could mean firms will face more scrutiny from investors in the future when it comes to securing data.
Original article by Kate Fazzini writing for CNBC.