Reference no: EM133524925

Case study 1: Yahoo: A Deafening Silence Amplifies a Crisis In September 2016, Yahoo leadership acknowledged a 2014 data breach that exposed the accounts of 500 million users to hackers. Three months later in December, the company then announced that there was another breach from 2013 that affected one billion accounts. Nearly a year later, in October 2017, Yahoo announced that, in fact, the data breach affected all 3 billion of its customers. Yahoo's business communication failure? Not communicating. It turned out that company insiders actually knew about the breach when it happened years earlier but kept it under wraps. Not only was this extremely poor business communication, but poor risk management. Running a company means running a gauntlet of risks. Companies need to have a risk management framework in place to prepare for any number of threats. Data breaches happen every 39 seconds. They are a risk a tech company like Yahoo was aware of and should have been prepared for. An internal investigation found that "failures in communication, management, inquiry, and internal reporting contributed to the lack of proper comprehension ASSIGNMENT 2 COMMUNICATION MANAGEMENT and handling of the 2014 Security Incident." By not addressing a crisis with internal stakeholders and customers, companies with communication issues face:

• Decrease in valuation: In this case, Yahoo was in the process of selling a piece of their company to Verizon who shaved $350 million off the asking price due to this mistake.

• Damaged brand reputation: People are less willing to trust a company who not only mishandles their personal information, but doesn't let them know their names, phone numbers, and passwords were stolen. With plenty of alternative search engines and email providers, Yahoo's failure to communicate most likely resulted in a loss of users.

• Loss of employee trust: Trust is a big-ticket item that delivers high employee confidence and engagement. A moment like this makes employees question the cultures and values of the organization they work for.

1. What is the issue faced by Yahoo and what was the error they did in terms of Communications with their Stakeholders?

2. What was the consequence of this error?

3. If you were in charge of Yahoo management how would you have communicated this breach what would be the corrective action plan you will put in place?