Study Shows Data Breach Costs Continue To Rise

  • Feb 04, 2009

PGP Corp. and the Ponemon Institute recently announced results of the fourth annual U.S. Cost of a Data Breach Study.

According to the study which examined 43 organizations across 17 different industry sectors, data breach incidents cost U.S. companies $202 per compromised customer record in 2008, compared to $197 in 2007.

Within that number, the largest cost increase in 2008 concerns lost business created by abnormal churn, meaning turnover of customers. Since the study's inception in 2005, this cost component has grown by more than $64 on a per victim basis, nearly a 40 percent increase.

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:

  • Average total per-incident costs in 2008 were $6.65 million, compared to an average per-incident cost of $6.3 million in 2007.
  • Healthcare and financial services companies experienced the highest churn rate -- 6.5 percent and 5.5 percent respectively, on a total average of 3.6 percent, which reflect the sensitivity of the data collected and the customer expectation that information will be protected.
  • Third-party organizations accounted for more than 44 percent of all cases in the 2008 study and are also the most costly form of data breaches due to additional investigation and consulting fees.
  • More than 84 percent of 2008 cases involved organizations that had had more than one data breach in 2008 -- meaning that companies are becoming more experienced in managing breaches over time.
  • More than 88 percent of all cases in this year's study involved insider negligence.
  • More than half of respondents believe that training and awareness programs assist in preventing future breaches and 44 percent have expanded their use of encryption.
  • The most significant cost decrease was seen in activities relating to post-breach response, which indicates that organizations are becoming more cost effective in managing data breaches.

"After four years of conducting this study, one thing remains constant, U.S. businesses continue to pay dearly for having a data breach," said Dr. Larry Ponemon, chairman and founder of the Ponemon Institute. "As costs only continue to rise, companies must remain on guard or face losing valuable customers in this unpredictable economy."

The study, sponsored by PGP Corp. and independently conducted by the Ponemon Institute, examines the financial consequences of data breaches involving consumers' personally identifiable information. The study uses objective methods for quantifying specific activities that result in direct, indirect and opportunity costs from the loss or theft of personal information, thus requiring notification to breach victims as required by law or policy.

"In this current economic climate, U.S. businesses can't afford to give their customers any reason to go elsewhere," said Phillip Dunkelberger, president and CEO of PGP Corp.. "This study continues to show that the results of a data breach can seriously wound a company's bottom line and reputation. This begs the question, when are organizations going to get proactive about protecting their critical data."

The complete report can be found at http://www.encryptionreports.com/.

Featured

  • Cost: Reactive vs. Proactive Security

    Security breaches often happen despite the availability of tools to prevent them. To combat this problem, the industry is shifting from reactive correction to proactive protection. This article will examine why so many security leaders have realized they must “lead before the breach” – not after. Read Now

  • Achieving Clear Audio

    In today’s ever-changing world of security and risk management, effective communication via an intercom and door entry communication system is a critical communication tool to keep a facility’s staff, visitors and vendors safe. Read Now

  • Beyond Apps: Access Control for Today’s Residents

    The modern resident lives in an app-saturated world. From banking to grocery delivery, fitness tracking to ridesharing, nearly every service demands another download. But when it comes to accessing the place you live, most people do not want to clutter their phone with yet another app, especially if its only purpose is to open a door. Read Now

  • Survey: 48 Percent of Worshippers Feel Less Safe Attending In-Person Services

    Almost half (48%) of those who attend religious services say they feel less safe attending in-person due to rising acts of violence at places of worship. In fact, 39% report these safety concerns have led them to change how often they attend in-person services, according to new research from Verkada conducted online by The Harris Poll among 1,123 U.S. adults who attend a religious service or event at least once a month. Read Now

  • AI Used as Part of Sophisticated Espionage Campaign

    A cybersecurity inflection point has been reached in which AI models has become genuinely useful in cybersecurity operation. But to no surprise, they can used for both good works and ill will. Systemic evaluations show cyber capabilities double in six months, and they have been tracking real-world cyberattacks showing how malicious actors were using AI capabilities. These capabilities were predicted and are expected to evolve, but what stood out for researchers was how quickly they have done so, at scale. Read Now

Most   Popular

New Products

  • Camden CV-7600 High Security Card Readers

    Camden CV-7600 High Security Card Readers

    Camden Door Controls has relaunched its CV-7600 card readers in response to growing market demand for a more secure alternative to standard proximity credentials that can be easily cloned. CV-7600 readers support MIFARE DESFire EV1 & EV2 encryption technology credentials, making them virtually clone-proof and highly secure.

  • EasyGate SPT and SPD

    EasyGate SPT SPD

    Security solutions do not have to be ordinary, let alone unattractive. Having renewed their best-selling speed gates, Cominfo has once again demonstrated their Art of Security philosophy in practice — and confirmed their position as an industry-leading manufacturers of premium speed gates and turnstiles.

  • Connect ONE’s powerful cloud-hosted management platform provides the means to tailor lockdowns and emergency mass notifications throughout a facility – while simultaneously alerting occupants to hazards or next steps, like evacuation.

    Connect ONE®

    Connect ONE’s powerful cloud-hosted management platform provides the means to tailor lockdowns and emergency mass notifications throughout a facility – while simultaneously alerting occupants to hazards or next steps, like evacuation.