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Edelman Study Finds Global Businesses Unprepared to Meet Customer and Regulator Expectations around Privacy and Data Security
In All Sectors, Companies That Collect Personal Information Face Growing Financial and Reputational Risks, Edelman Privacy Risk Index Reveals ePRI Online Tool Launched to Benchmark Businesses Privacy Risk Brussels, 13th November Edelman today released the Edelman Privacy Risk Index a global study , that reveals many organizations lack the business behaviors and compliance practices necessary to adequately address growing consumer and regulatory concerns about data security and privacy. The comprehensive study of 6,400 corporate privacy and security executives was conducted by the Ponemon Institute, a leading independent research organization. The analysis spans 29 countries around the world, and is believed to be one of the largest studies of its kind ever fielded. The Edelman Privacy Risk Index reveals a lack of preparedness in managing the potential financial and reputational damage relating to the loss or misuse of personal information. Businesses, particularly at a senior level, are not reacting quickly enough to data and security risk.

Lack of Emphasis: Over half (57 percent) of respondents think their organization does not consider privacy and the protection of personal information to be a corporate priority. Six out of ten (61 percent) companies do not strictly enforce all levels of compliance with laws and regulations. Lack of Resources: Meanwhile, 62 percent say their organization does not have the expertise, training or technology, and 55 percent say the adequate resources, to protect personal information. Lack of Transparency: Over half (57 percent) of respondents believe their company is not transparent about what it does with employee and customer information, and 61 percent are slow to respond to consumer and regulator complaints about privacy.i

The results are in stark contrast to the growing consumer and regulatory pressure on companies to handle personal data responsibly and securely. Companies will see increased regulatory scrutiny due to new legislation in the European Union, Latin America and Asia, as well as increased enforcement by the Federal Trade Commission in the United States.

Even more concerning is the potential loss of consumer trust. According to research undertaken by Edelman earlier this year, 85 percent of consumers around the world feel companies need to take data security and privacy more seriously, while 70 percent said they are more concerned about these issues than they were five years ago.ii The Edelman Privacy Risk Index findings shine a light on the worrying void between business privacy practices and consumer expectations about how their personal data is handled. From a communications and stakeholder engagement point of view, what is most concerning is the lack of clarity and transparency about these practices, says Pete Pedersen, global chair, Technology practice, Edelman. With the growing level of consumer, media and regulatory attention currently focused on privacy, businesses simply cannot afford to risk the reputational and financial damage that may result from a lack of attention to this business critical need. Rather, we see an opportunity for businesses to grow confidence and trust in their brands through thoughtful privacy and data management, offered Ben Boyd, global chair, Corporate practice, Edelman. The research also highlighted a lack of awareness of the potential risks related to data security and privacy incidents. Over half (53 percent) of respondents think a data breach would not adversely impact their reputation or financial position, despite nearly three quarters (71 percent) of consumers saying they would leave a company after a data breach. Additionally, 57percent of organizations believe that employees do not understand the importance of privacy and two thirds do not make an effort to educate employees about privacy and security issues ePRI Online Tool The Edelman Privacy Risk Index is complemented by an online benchmarking tool, unveiled today on, which enables businesses to quickly benchmark their own privacy risk based on the data. The online tool provides a Privacy Risk Index score, with a high risk score indicating a company is more likely to suffer reputation damage or economic losses as a result of a privacyrelated problems and incidents. The most comprehensive study of its kind to date, the Edelman Privacy Risk Index is based on studies in 29 countries on privacy, data protection and data breach incident management conducted by the Ponemon Institute over the last three years. The Index allows organizations to gain a better understanding of their privacy risk against those of similar size, geography and industry sector and provide insights with which to develop a robust set of privacy policies and strategies, says Larry Ponemon, Founder, The Ponemon Institute. Companies increasingly understand that using data effectively will lead to innovation, better consumer services and smarter marketing, says Jules Polonetsky, Director and Co-chair of the Future of Privacy Forum. But all of these new uses of personal information also create risks that if mishandled could undermine consumer trust and lead to restrictive regulation. This study shows that many of the front line employees who are managing compliance don't believe that they have the

necessary practices, protocols and behaviors in place to safeguard against financial or reputational damage. Senior business leaders need to assess their company privacy risk and avoid becoming a high profile example of the damage that can result from misuse or loss of consumer data. About Edelman Edelman is the worlds largest public relations firm, with 66 offices and more than 4,500 employees worldwide, as well as affiliates in more than 30 cities. Edelman was named Advertising Ages topranked PR firm of the decade in 2009 and one of its A-List Agencies in both 2010 and 2011; Adweeks 2011 PR Agency of the Year; PRWeeks 2011 Large PR Agency of the Year; and The Holmes Reports 2011 Global Agency of the Year and its 2011 North American Large Agency of the Year. Edelman was named one of the Best Places to Work by Advertising Age in 2010 and 2012 and among Glassdoors top five 2011 Best Places to Work. Edelman owns specialty firms Edelman Berland (research), Blue (advertising), A&R Edelman (technology), BioScience Communications (medical communications), and agencies Edelman Significa (Brazil), and Pegasus (China). Visit for more information. About the Ponemon Institute The Ponemon Institute is dedicated to advancing responsible information and privacy management practices in business and government. To achieve this objective, the Institute conducts independent research, educates leaders from the private and public sectors and verifies the privacy and data protection practices of organizations in a variety of industries.

Edelman Privacy Risk Index Powered by Ponemon, published November 13, 2012 Edelman Privacy & Security: The New Drivers of Brand, Reputation and Action Global Insights 2012, published March 7, 2012