Data Breach Costs on Rise

Tuesday, May 6, 2014 @ 06:05 AM gHale

The average consolidated total cost of a data breach increased 15 percent in the last year to $3.5 million, new research found.

The cost incurred for each lost or stolen record containing sensitive and confidential information increased more than nine percent to a consolidated average of $145, according to the research from Ponemon Institute’s ninth annual “Cost of Data Breach Study: Global Analysis” report.

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The research involved the collection of detailed information about the financial consequences of a data breach. For purposes of this research, a data breach occurs when sensitive, protected or confidential data ends up lost or stolen and put at risk. Ponemon Institute conducted 1,690 interviews with IT, compliance and information security practitioners representing 314 organizations in 10 countries: United States, United Kingdom, Germany, Australia, France, Brazil, Japan, Italy, India and the Arabian region (a consolidation of organizations in the United Arab Emirates and Saudi Arabia).

“The goal of this research is to not just help companies understand the types of data breaches that could impact their business, but also the potential costs and how best to allocate resources to the prevention, detection and resolution of such an incident,” said Dr. Larry Ponemon, chairman and founder of Ponemon Institute. This year’s Cost of Data Breach Study also provides guidance on the likelihood an organization will have a data breach.

Key takeaways:
• The most costly breaches occurred in the U.S. and Germany at $201 and $195 per compromised record, respectively. The least expensive data breaches were in India and Brazil at $51 and $70, respectively.
• Root causes of data breaches differ among countries. Countries in the Arabian region and Germany had more data breaches caused by malicious or criminal attacks. India had the most data breaches caused by a system glitch or business process failure. Human error was most often the cause in the UK and Brazil.
• The most costly data breaches were those caused by malicious and criminal attacks. The U.S. and Germany paid the most at $246 and $215 per compromised record, respectively. These types of data breaches were least costly for companies in India and Brazil at $60 and $77 per compromised record, respectively.
• A security posture was critical to decreasing the cost of data breach. On average, companies that self-reported they had a strong security posture were able to reduce the cost by as much as $14 per record.
• The involvement of business continuity management reduced the cost of data breach by an average of almost $9 per record.
• The appointment of a Chief Information Security Officer (CISO) to lead the data breach incident response team reduced the cost of a breach by more than $6.
• Countries that lost the most customers following a data breach were France and Italy. Companies in the Arabian region and Brazil experienced the lowest loss of customers.
• The probability of a company having a data breach involving 10,000 or more confidential records is 22 percent over a two-year period. Countries most likely to experience a data breach include India, Brazil and France.

Consistent with previous Cost of Data Breach studies, most often the common cause of a data breach is a malicious insider or criminal attack. The survey asked what worries companies most about security incidents:
• The greatest threats to the companies in this study are malicious code and sustained probes. According to threats increased.
• Only 38 percent of companies have a security strategy to protect its IT infrastructure. A higher percentage (45 percent) has a strategy to protect their information assets.
• Malicious code and sustained probes have increased the most. Companies estimate they will be dealing with an average of 17 malicious codes each month and 12 sustained probes each month. Unauthorized access incidents have mainly stayed the same and companies estimate they will be dealing with an average of 10 such incidents each month.

Click here to register for the report.

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