Responsible Information Management and the 2014 Cost of Data Breach: Global Analysis
Larry Ponemon - Ponemon Institute
Oct 01, 2014Size: 137.9MB
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AbstractThroughout the world, companies are finding that data breaches have become as common as a cold but far more expensive to treat. With the exception of Germany, companies had to spend more on their investigations, notification and response when their sensitive and confidential information was lost or stolen. As revealed in the 2014 Cost of Data Breach Study: Global Analysis, sponsored by IBM, the average cost to a company was $3.5 million in US dollars and 15 percent more than what it cost last year.
Will these costs continue to escalate? Are there preventive measures and controls that will make a company more resilient and effective in reducing the costs? Nine years of research about data breaches has made us smarter about solutions.
Critical to controlling costs is keeping customers from leaving. The research reveals that reputation and the loss of customer loyalty does the most damage to the bottom line. In the aftermath of a breach, companies find they must spend heavily to regain their brand image and acquire new customers. Our report also shows that certain industries, such as pharmaceutical companies, financial services and healthcare, experience a high customer turnover. In the aftermath of a data breach, these companies need to be especially focused on the concerns of their customers.
As a preventive measure, companies should consider having an incident response and crisis management plan in place. Efficient response to the breach and containment of the damage has been shown to reduce the cost of breach significantly. Other measures include having a CISO in charge and involving the company’s business continuity management team in dealing with the breach.
In most countries, the primary root cause of the data breach is a malicious insider or criminal attack. It is also the most costly. In this year’s study, we asked companies represented in this research what worries them most about security incidents, what investments they are making in security and the existence of a security strategy.
An interesting finding is the important role cyber insurance can play in not only managing the risk of a data breach but in improving the security posture of the company. While it has been suggested that having insurance encourages companies to slack off on security, our research suggests the opposite. Those companies with good security practices are more likely to purchase insurance.
Global companies also are worried about malicious code and sustained probes, which have increased more than other threats. Companies estimate that 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.
When asked about the level of investment in their organizations’ security strategy and mission, on average respondents would like to see it doubled from what they think will be spent—an average of $7 million to what they would like to spend—an average of $14 million. This may be a tough sell in many companies. However, our cost of data breach research can help IT security executives make the case that a strong security posture can result in a financially stronger company.
About the SpeakerDr. Larry Ponemon is the Chairman and Founder of the Ponemon Institute, a research “think tank” dedicated to advancing privacy, data protection and information security practices. Dr. Ponemon is considered a pioneer in privacy auditing and the Responsible Information Management or RIM framework. Security Magazine has named Dr. Ponemon as one of the “Most Influential People for Security.”
Dr. Ponemon was appointed to the Advisory Committee for Online Access & Security for the United States Federal Trade Commission. He was appointed by the White House to the Data Privacy and Integrity Advisory Committee for the Department of Homeland Security. Dr. Ponemon was also an appointed to two California State task forces on privacy and data security laws. He serves as chairman of the Government Policy Advisory Committee and co-chair of the Internet Task Force for the Council of American Survey and Research Organizations (CASRO).
Dr. Ponemon was a senior partner of PricewaterhouseCoopers, where he founded the firm’s global compliance risk management group. Prior to joining Price Waterhouse as a partner, Dr. Ponemon served as the National Director of Business Ethics Services for KPMG Peat Marwick, and was appointed Executive Director of the KPMG Business Ethics Institute.
Dr. Ponemon has held chaired (tenured) faculty positions and published numerous articles and learned books. He has presented hundreds of keynote speeches or learned presentations at national or international conferences on privacy, data protection, information security, corporate governance, and responsible information management. Dr. Ponemon is an active member of the International Association of Privacy Professionals, serving as founding member of the Certified Information Privacy Professional (CIPP) Advisory Board.
Dr. Ponemon earned his Ph.D. at Union College in Schenectady, New York. He has a Master’s degree from Harvard University, Cambridge, Massachusetts, and attended the doctoral program in system sciences at Carnegie Mellon University, Pittsburgh, Pennsylvania. Dr. Ponemon earned his Bachelors with Highest Distinction from the University of Arizona, Tucson, Arizona. He is a Certified Public Accountant and a Certified Information Privacy Professional.
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