Security Newswire

Report: The Cost of a Data Breach Continues to Increase

January 26, 2010
/ Print / Reprints /
ShareMore
/ Text Size+

Data breach incidents cost U.S. companies $204 per compromised customer record in 2009, compared to $202 in 2008, says a report on the subject by the Ponemon Institute and PGP Corp. The fifth annual survey shows a significant spike in legal defense spending while breaches involving third-party organizations remained the most costly.
 
Despite an overall drop in the number of reported breaches (498 in 2009 vs. 657 in 2008 according to the Identity Theft Resource Center), the average total per-incident costs in 2009 were $6.75 million, compared to an average per-incident cost of $6.65 million in 2008.
 
 
The annual U.S. Cost of Data Breach Study tracks a wide range of cost factors, including expensive outlays for detection, escalation, notification and response along with legal, investigative and administrative expenses, customer defections, opportunity loss, reputation management, and costs associated with customer support such as information hotlines and credit monitoring subscriptions.
 
 
Other key findings from the study include:
 
The cost of a data breach as the result of malicious attacks and botnets were more costly and severe.Negligent insider breaches have decreased in number and cost most likely resulting from training and awareness programs having a positive affect on employees' sensitivity and awareness about the protection of personal information. Additionally, 58 percent have expanded their use of encryption up from 44 percent last year.
 
 
Organizations are spending more on legal defense costs which can be attributed to increasing fears of successful class actions resulting from customer, consumer or employee data loss.Average abnormal churn rates across all incidents in the study were slightly higher than last year (from 3.6 percent in 2008 to 3.7 percent in 2009), which was measured by the loss of customers who were directly affected by the data breach event (i.e., typically those receiving notification).
 
 
The industries with the highest churn rate were pharmaceuticals, communications and healthcare (all at 6 percent), followed by financial services and services (both at 5 percent).
 
 
Third-party organizations accounted for 42 percent of all breach cases, dropping from 44 percent of all cases in 2008. These remain the most costly form of data breaches due to additional investigation and consulting fees.The most expensive data breach event included in this year's study cost a company nearly $31 million to resolve. The least expensive total cost of data breach for a company included in the study was $750,000.
 
 
"In the five years we have conducted this study, we have continued to see an increase in the cost to businesses for suffering a data breach," said Dr. Larry Ponemon, chairman and founder of The Ponemon Institute. "With a variety of threat vectors to contend with, companies must proactively implement policies and technologies that mitigate the risk of facing a costly breach." The study takes into account a wide range of business costs, including expense outlays for detection, escalation, notification, and after the fact (ex-post) response. The study also analyzes the economic impact of lost or diminished customer trust and confidence, measured by customer churn or turnover rates.

Did you enjoy this article? Click here to subscribe to Security Magazine. 

You must login or register in order to post a comment.

Multimedia

Videos

Image Galleries

ASIS 2013 Product Preview

ASIS International 59th Annual Seminar and Exhibits, September 24-27 in Chicago, Illinois, will include an exhibit hall packed with innovative security solutions. Here are some of the products that will be shown at ASIS this year.

Podcasts

Virtualization and Data Center Security: What You Need to Know for 2014

Data centers are increasingly becoming the center of the enterprise, and data center and cyber security is following the same path for security departments. According to Justin Flynn, a consultant at the Burwood Group, the virtualization of data centers allows enterprises to scale more easily and faster, with a smaller footprint.

However, hosting enterprise data in the cloud can make intrusion detection more difficult – how can enterprise security leaders team up with other departments to keep aware of cyber risks and traffic, and physical and data compliance during the virtual transition? How can CISOs and CSOs discuss cyber threats with the C-Suite to get the resources they need? And how can the proper infrastructure test and verify possible malicious attacks? 

More Podcasts

Security Magazine

Security December 2014 issue cover

2014 December

This issue of Security Magazine covers our 12th annual Top Guarding Firms list. Check out the best of the best as of December 2014. The 21st century has brought with it new types of security threats. Read how to combat and protect against these threats.

Table Of Contents Subscribe

Security Emergency Preparedness Training

Which security personnel emergency preparedness training is the top priority to you and your enterprise?
View Results Poll Archive

THE SECURITY STORE

comptiahighriseproductphoto
CompTIA Security+ Certification Study Guide
CompTIA's Security+ certification is a globally-recognized, vendor neutral exam that has helped over 60,000 IT professionals reach further and higher in their careers. The current Security+ exam (SY0-201) focuses more on being able to deal with security issues rather than just identifying them.
More Products

Clear Seas Research

Clear Seas ResearchWith access to over one million professionals and more than 60 industry-specific publications,Clear Seas Research offers relevant insights from those who know your industry best. Let us customize a market research solution that exceeds your marketing goals.

STAY CONNECTED

Facebook 40px 2-12-13 Twitter logo 40px 2-12-13  YouTube  LinkedIn logo 40px 2-12-13Google+

Vertical Sector Focus: Critical Infrastructures

criticalhomepagethumbFrom terrorism to vandalism, it’s preparedness, response, training and partnerships. Learn about some of the critical security issues facing this sector.

Visit the Critical Infrastructure page to read more.