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Risk

1/25/2010
09:56 AM
George V. Hulme
George V. Hulme
Commentary
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Cost of Data Breaches Continue Their Rise

Businesses that suffered a data breach in 2009 paid a higher price for the incident than any previous year, according to a study released today. Also, the average cost for a data breach reached an eye-opening $6.75 million.

Businesses that suffered a data breach in 2009 paid a higher price for the incident than any previous year, according to a study released today. Also, the average cost for a data breach reached an eye-opening $6.75 million.The results come from the 2009 U.S. Cost of a Data Breach Study conducted by the Ponemon Institute and security firm PGP Corporation.

This study, in its fifth year now, aims to quantify what many industry watchers believe - that data breaches can cost companies business. The analysis examined actual data breaches at 45 U.S. firms within 15 different industries. Size of breaches in the survey ranged from less than 2,500 records to more than 101,000 records.

According to the report, the cost of a data breach increased to $204 from last year's $202 per customer record. The bulk of those costs are what the authors of the report call "indirect costs" which includes lost customers and peripheral expenses related to the breach. Only $50 per incident is directly attributable to the breach, which includes engaging forensic experts, outsourced hotline support, free credit monitoring subscriptions, and future product or service discounts.

Other noteworthy findings in the report include:

Malicious and botnet related attacks appear to be more costly and severe than other breaches.

Training and security awareness efforts may be paying off as negelence-related breaches have decreased in number and cost.

Legal costs are going up and companies spend more on legal defense costs.

The most expensive data breach in this year's study cost a company nearly $31 million. The least expensive data breach for a company included in the study was $750,000.

The report can be found here, although registration is required to download.

 

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