Data Breach Costs Continue Climbing

The average cost of a data breach for a U.S. company continues to rise, having reached $7.2 million in 2010.

This represents an increase of 7% from 2009, when the average cost was found to be $6.8 million, according to Symantec which published "2010 Annual Study: U.S. Cost of a Data Breach," and the Ponemon Institute, which conducted the research.

The cost of losing data has grown for U.S. companies every year since 2006.

Larry Ponemon, founder of the Ponemon Institute, says that there was one unusual finding: A rapid response to a breach, which generally involves notifying everyone potentially affected, turns out to be more costly than a slow response.

Increasingly sophisticated data security threats and compliance pressures are pushing organizations to respond as rapidly as possible to data breaches. This is reflected in the finding that malicious attacks have become the most costly cause of breaches. But responding quickly to a breach may not be called for in every instance.

This isn't to say a slow response is always good; rather, it reflects the survey's finding that rapid notification can be a waste of money if subsequent investigation indicates some of those notified were not affected after all.

"In the world of data breaches, telling people your data is lost or stolen and then having to change that doesn't help anyone," said Ponemon in a phone interview.

Quick responders paid $268 per record, an increase of 22% from 2009, while organizations that took more time paid $174 per record, a decrease of 11% from 2009.

Symantec has created an online data breach calculator to help companies assess the potential cost and likelihood of a data breach. Not coincidentally, Symantec sells security solutions, particularly those focused on encryption.

Encryption has become more popular lately because data breach regulations often exempt companies from notification requirements if the lost data was encrypted.

This trend is partially reflected in the survey, which found: an increase in the number of organizations with an "above average IT security posture"; a decrease in breaches due to system failure, lost or stolen devices, and third-party mistakes; and more companies responding faster and putting CISOs in charge of response management.

Negligence remains the most common cause of breach incidents (41%), followed by lost or stolen portable or mobile devices (35%), malicious attacks (31%), and system failure (27%).