The Cost Of Data Breaches


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The Cost Of Data Breaches

  1. 1. The cost of data breaches: Looking at the hard numbers Page 1 of 3 Activate your FREE membership today | Log-in Advanced Search | Site Index SEARCH : Powered by: Microsoft Dynamics: ERP Software Your People Can Actually Use. Try It Out Free. Home > Security Tips > Compliance Counselor > The cost of data breaches: Looking at the hard numbers Security Tips: EMAIL THIS TIPS & NEWSLETTERS TOPICS COMPLIANCE COUNSELOR The cost of data breaches: Looking at the hard numbers Khalid Kark Identity Theft and Data Security Breaches 03.21.2007 Rating: -4.17- (out of 5) NEWS, TIPS & MORE RSS FEEDS: Enterprise IT tips and expert advice For data minders, 2007 was a year of living ... (ARTICLE) Banks agree to settle lawsuits against TJX (ARTICLE) TJX data breach costs could be settled in court ... (ARTICLE) As the frequency and gravity of security breaches has increased over the past few TJX offers $40.9 million breach settlement (ARTICLE) years, there have been several attempts to estimate the costs associated with VIEW MORE them. VENDOR CONTENT Webcast: Who's Reading Your Old Disk Drives? The estimates, however, have churned out vastly different figures, further adding to (WEBCAST) the confusion. For example, a U.S. Department of Justice study, published in August 2006, determined that the average loss per incident was $1.5 million. These [AD] calculations conflicted with a 2005 CSI/FBI survey that estimated the cost to be $167,000. Meanwhile, a 2006 Ponemon Institute survey figured expenses at $4.8 million per breach, while some CISOs put the cost to recover from a security incident at $1,000 per hour. And if that dizzying array of estimates wasn't bewildering enough, a recent Forrester survey found that 25% of respondents do not know, or do not know how to determine, the cost of data security breaches. Puzzlingly, of companies that confirmed a personal data loss, 11% said that they did not incur any additional costs. But let me tell you, if you have a data breach, you will incur additional costs, significant enough to even put you out of business. Tangible costs Tangible costs are the unbudgeted expenses resulting from a security breach. These costs typically include legal fees, mail notification letters, calls to individual customers, increased call center costs and discounted product offers. Surprisingly, most estimates agree on this cost to be around $50 per record. This cost has increased slightly over previous years, but will continue to be somewhere around DR Testing Techniques (VIDEOCAST) this number. PCI Compliance Report: Cost Analysis Reveals Expense Justified (WHITE PAPER) Regulations and lost employee productivity Philips Medical Systems Cures Storage Heartache with When employees and contractors are diverted from their normal duties in order to the Intel® Entry Storage System ... (CASE STUDY) address data breach controls, a company loses money. According to a Ponemon VIEW MORE Institute survey, this cost had increased 100% in 2006 from $15 per record in 2005, to $30/record in 2006. The primary reason for this increase has been the growing SEE ALSO number of entities and regulations that must be satisfied. Previously, if a company Related Topics: had a data breach, a security team fixed the problem, tested the mitigation and then Identity Theft and Data Security Breaches , Viruses, the company resumed normal activities. Now, the threat of a data breach forces Worms and Other Malware, Spyware, Adware and Trojans companies to satisfy the industry regulators, like the Payment Card Industry (PCI) Site Highlights: Security Standards Council for credit card breaches, or the HIPAA auditors for Free Online IT Training healthcare regulations. Spyware Learning Guide GET E-MAIL UPDATES As the ChoicePoint data breach has shown, Submit your e-mail below to receive Security-related news, where the personal financial records of For more information on data tech tips and more, delivered to your inbox. more than 163,000 consumers had been security breach costs... compromised, the Federal Trade c d e f g Current Threats According to a recent survey, Commission and other judiciary committees E-mail: Your E-mail Address data breach costs have may also get involved and impose their own Not a member? We'll activate your FREE requirements and restrictions. This cost is skyrocketed. Read more about membership with your subscription. bound to increase in the future, as well. it here. In this exclusive Security Wire Stock price In the long run, a security breach does not Weekly podcast, Larry have a significant effect on a company's Ponemon talks about the stock price, but it could. A stock typically difficulty of spotting data dips immediately after a data breach, but breaches. the price rebounds quickly, and after one year there is very little evidence of the See how the TJX data breach breach affecting the stock. has affected PCI compliance efforts. The aftermath of the ChoicePoint data breach was an exception: its stock price fell 3.1% on the day the breach was reported, and then continued to fall. Five days after,289483,sid14_gci1248216,00.html 07-Jan-08
  2. 2. The cost of data breaches: Looking at the hard numbers Page 2 of 3 the story made the papers, its stock plummeted by nearly 10%. Now, almost two years after the data debacle, the stock is about 20% lower. The reason for its unique long-term loss can be linked to a change in its top-line offerings. ChoicePoint reacted to the breach by dropping some of its information products. So even though a company's stock may recover soon after a security blunder, a lengthy recovery period is certainly a possibility. Opportunity cost Companies also typically experienced customer losses after a breach, but the severity varies significantly as well. Typically, banks and hospitals have had the lowest churn rates, and retail outlets have had the highest. A more significant issue at hand is the difficulty in acquiring new customers -- or new customer opportunities -- after a security breach. This number is hard to quantify, but most estimates compare these expenses to tangible costs. A Ponemon study, for example, puts opportunity cost at $98 per record, a 31% increase from 2005. This number is expected to grow as customers' security expectations increase and businesses compete on data protection technology. Regulatory requirements and fines When a breach occurs, both customers and regulators need to be satisfied. Regulators may impose additional security requirements or fines. For example, Visa levied $4.6 million in fines, penalizing companies that mismanaged sensitive customer data; the company levied $3.4 million in 2005. Similarly, ChoicePoint paid $10 million in civil penalties and $5 million in consumer redress to settle the Federal Trade Commission's demands. As laws and regulations increase, this cost will become much more significant. Conclusion All things considered, a security breach can cost you anywhere between $50 to $250 per record. Depending on how many records are at stake, individual breach costs may run into millions or even billions of dollars -- and organizations still aren't prepared to protect their environments. Although studies may not be able to determine the exact cost of a security breach in your organization, the loss of sensitive data can have a crippling impact on an organization's bottom line, especially if it is ill-equipped. About the author: Khalid Kark, CISSP, CISM is a senior analyst with Forrester Research Inc. in Cambridge, Mass., where he covers security strategy, including communication strategies, security organization, and the role of information security in corporate governance. Rate this Tip To rate tips, you must be a member of Register now to start rating these tips. Log in if you are already a member. Share - Digg This! Bookmark with SECURITY RELATED LINKS Ads by Google Data Security Simplify your SMB voice and data networks & save. Sensitive Data Policy Sensitive Information Policy meets Sarbanes-Oxley Sec 404 / Security Compliant with PCI DSS? Find out how GFI can help you obtain PCI DSS compliance! Batch Process Simulation Process Modeling, Scheduling, Cost Analysis, and De-bottlenecking Data Loss Prevention Learn more about Proofpoint's data loss prevention & email security RELATED CONTENT Compliance Counselor Compliance year in review: PCI DSS progress, yet confusion abounds Why you shouldn't wager the house on risk management models Applying PCI DSS to Web application security PCI DSS emergency: What to do if you're (very) late to the game Complex password compliance requirements made simple Dissecting compliance workflow processes PCI Pain: Is it time for an overhaul? PCI Data Security Standard compliance: Setting the record straight Considerations for encryption and compliance COSO and COBIT: The value of compliance frameworks for SOX Identity Theft and Data Security Breaches For data minders, 2007 was a year of living dangerously Lessons learned from TJX: Best practices for enterprise wireless encryption Banks agree to settle lawsuits against TJX TJX data breach costs could be settled in court appeal Sophisticated spam, employee errors continue unabated TJX offers $40.9 million breach settlement,289483,sid14_gci1248216,00.html 07-Jan-08
  3. 3. The cost of data breaches: Looking at the hard numbers Page 3 of 3 Data breach costs soar Experts: Privacy and security officers living in silos Convio acknowledges security breach PCI DSS Council adding new standard for payment applications Information Security Incident Response Data breach costs soar What are the proper procedures for handling a potential insider threat? Black Hat 2007: Estonian attacks were a cyber riot, not warfare Survey: Companies disregard data security breach risks Endpoint Security Digital forensics tool Helix 'does no harm' How should information security and networking groups coordinate firewall management? RSA Conference: Experts say companies need data theft response plans RSA Conference: Middle ground hard to find in vulnerability disclosure debate When physical and logical security converge Information Security Incident Response Research RELATED GLOSSARY TERMS Terms from − the technology online dictionary bot worm ( CISP-PCI ( cookie poisoning ( drive-by pharming ( identity theft ( parameter tampering ( pretexting ( Rock Phish ( RELATED RESOURCES, trial software downloads for accounting software, ERP software, CRM software and business software systems Search for the latest white papers and business webcasts, the online computer dictionary DISCLAIMER: Our Tips Exchange is a forum for you to share technical advice and expertise with your peers and to learn from other enterprise IT professionals. TechTarget provides the infrastructure to facilitate this sharing of information. However, we cannot guarantee the accuracy or validity of the material submitted. You agree that your use of the Ask The Expert services and your reliance on any questions, answers, information or other materials received through this Web site is at your own risk. View this month's Apply online for free issue and subscribe conference admission. today. Advanced Search | Site Index SEARCH : Powered by: About Us | Contact Us | For Advertisers | For Business Partners | Site Index | RSS TechTarget provides enterprise IT professionals with the information they need to perform their jobs - from developing strategy, to making cost- effective IT purchase decisions and managing their organizations' IT projects - with its network of technology-specific Web sites, events and magazines. TechTarget Corporate Web Site | Media Kits | Reprints | Site Map All Rights Reserved, Copyright 2003 - 2008, TechTarget | Read our Privacy Policy,289483,sid14_gci1248216,00.html 07-Jan-08