Medibank’s cyber breach is much worse than expected

Medibank (ASX:MPL) customers and investors have learned that the cybercrime against the company was worse than had been feared. The company gave an update to the ASX this morning on the news, but it remains to be seen how investors will respond.

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Medibank data breach gets worse

Medibank, its investors and customers already knew that a criminal stole the login credentials of someone with high-level systems access and sold the data. The company had been piecing together just how its system was penetrable.

Although this was first detected two weeks ago, Medibank had believed it was confined to its budget subsidiary ahm and data collected about international students who used Medibank under its OSHC service. 

This morning, the company confirmed data from its main brand was also compromised and that criminals stepped up extortion demands by providing another 1000 customers’ details.

The company set to be punished

At the very least, we think shareholders will punish the company’s share price when trading resumes. Medibank shares are in a trading halt until tomorrow. But it also remains to be seen if it will cop any penalties over the incident. 

Medibank (ASX:MPL) share price chart (Graph: TradingView)

The company announced a customer support package including 24/7 mental health and wellbeing support and had deferred premium increases until January next year. 

Investors who do not hold shares in Medibank may not be concerned about this incident. But we think they should take notice that the risk of cybercrime against companies is realistic, can occur unexpectedly and cause significant damage to a company’s reputation and potentially its finances.

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