The Hidden Costs of Misinformation to Businesses

The hidden costs of misinformation to businesses

Fake news online costs the global economy $78 billion¹  each year, and it is just one facet of the misinformation network.

With the exponential growth of technology in our digital lives, the roots of misrepresentation and misinterpretation are spreading deeper into society, with direct and indirect consequences on businesses.

Disinformation is relentless; it does not tire, nor does it rest when an organisation’s working hours are over for the day. Former US cybersecurity head Chris Krebs issued a stark caution²  to organisations: “You’ve either been the target of a disinformation attack or you are about to be.”

The threats that businesses might face from misinformation are manifold. As such, there are numerous risks, depending on the type of misinformation, companies and industries that are involved. A couple of obvious risks include the loss of consumer, employee and/or investor trust, and the decline in brand reputation. Depending on the severity of the issue, misinformation can also cause major crises for corporations.

Fighting fake news requires funds

As with most things, there are also ‘hidden,’ less obvious costs that might come into play when businesses collide with misinformation. Here are key ones to consider:

• Evaluation costs When faced by a misinformation crisis, companies will need to evaluate the details to confirm the scope of the problem, and the elements involved. Businesses that are unprepared will have to expend more resources – whether money, time or both – in performing this groundwork.
• Triage costs Once the issue has been uncovered, companies need to figure out how to identify and prioritise the relevant work required to react to the misinformation, temper its magnitude, patch up any relevant problems and begin to rebuild trust. Depending on the type and scale of misinformation involved, this could be an extremely complex process requiring additional resources, in terms of both time and money – before any reparation work can begin.
• Opportunity costs Teams are dispatched to deal with a crisis created by misinformation, leaving a vacuum where their other everyday responsibilities lie. This represents an opportunity cost (of one action instead of another), with resources being diverted from business as usual.
• Third-party costs Companies that require third-party assistance (e.g., communications specialists and additional technical support) may find themselves with substantial bills that they did not budget for.
• Regulatory costs Even if misinformation is not a company’s fault, it might fall foul of regulatory fines and associated costs, for example, when fraud is involved.
• Distraction Not only is misinformation a distraction for the teams on the frontline, but the stress and uncertainty can also affect other employees trying to get on with their own projects, further diminishing productivity.

Misinformation can wreak havoc on businesses. Fortunately, businesses that are prepared can get a head start and minimise some of the costs – both obvious and hidden – required to run a crisis response, and to manage and mitigate the risks.

Download the iResearch Services report to find out how to be proactive, not reactive, to the risks posed by misinformation.

References:

1. Brown, E (2019), Online fake news is costing us $78 billion globally each year, ZDNet, https://www.zdnet.com/article/online-fake-news-costing-us-78-billion-globally-each-year/

2. Fried, I (2021), Disinformation is coming for your business, Axios, https://www.axios.com/disinformation-business-security-a71b7758-cba5-49ce-844d-b5e70a1c65b2.html