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May 29, 2019

Equifax Breach Cost $1.4 Billion! Caused Moody's Downgrade

It's bad enough that a cybersecurity breach at Equifax happened - it further caused tremendous reputational damage and the CEO had to go to Congress and get grilled in public.

It even got the media to react by calling for the Equifax death penalty.

If this wasn't bad enough, credit ratings firm Moody's has now downgraded the company and actually noted the cybersecurity incident as the reason.

This is the first time this has happened.

The cost has been staggering! $1.4 billion in legal and IT bills. In a stack of one-dollar bills this would be 95 miles high!

Interestingly, in 2017, the attack caused the stock value to plummet by $2.2 billion!

IT decision makers can expect cybersecurity risks to continue to impact their companies financially, according to Anthony Vance, professor at Temple University and director of the Center for Cybersecurity at Fox School of Business, in an interview with CIO Dive

"There haven't really been long-term repercussions for mega-breaches," said Vance. "There have been initial hits to the stock price, but what's interesting here is that it's the first time [Moody's] specifically said the breach was a reason for the downgrade."

Beyond IT investment, Moody's added cybersecurity risks into its assessments will also take into consideration the potential damage a breach could do to a company's reputation, the firm said in a February report.

The firm identified four "high-risk" sectors for cyberattacks: banks, securities firms, market infrastructure providers and hospitals, due to their heavy tech reliance for operations. Combined, these markets represent $11.7 trillion in rated debt outstanding.

Hopefully CEOs and business executives will learn from what happened here and take steps needed to protect themselves.

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