Ponemon Study Indicates Organizational Data Breach Costs Hit $7.2 Million and Show No Sign of Leveling Off
"We continue to see an increase in the costs to businesses suffering a data breach," said Dr. Larry Ponemon, chairman and founder of the Ponemon Institute. "Regulators are cracking down to ensure organizations implement required data security controls or face harsher penalties. Confronted with both malicious and non-malicious threats from inside and outside the organization, companies must proactively implement policies and technologies to mitigate the risk of costly breaches."
Key findings from the study include:
- Rapid response to data breaches is costing companies 54 percent more per record than companies that moved more slowly. Forty-three percent of companies notified victims within one month of discovering the breach, up seven points from 2009. In 2010, these quick responders had a per-record cost of $268, up 22 percent from 2009; companies that took longer paid $174 per record, down 11 percent.
- Malicious or criminal attacks are the most expensive and are on the rise. In this year's study, 31 percent of all cases involved a malicious or criminal act, up seven points from 2009, and averaged $318 per record, up 43 percent from 2009.
- Negligence remains the most common threat. The number of breaches caused by negligence edged up one point to 41 percent and averaged $196 per record, up 27 percent from 2009. This steady trend reflects the ongoing challenge of ensuring employee and partner compliance with security policies.
- Companies are more vigilant about preventing system failures. System failure dropped nine points to 27 percent in 2010. This trend indicates organizations may be more conscientious in ensuring their systems can prevent and mitigate breaches through new security technologies and compliance with security policies and regulations.
- Data breach costs have continued to rise. The average organizational cost of a data breach this year increased to $7.2 million, up seven percent from $6.8 million in 2009. Total breach costs have grown every year since 2006. Data breaches in 2010 cost companies an average of $214 per compromised record, up $10 (5 percent) from last year.
- Encryption and other technologies are gaining ground as post-breach remedies, but training and awareness programs remain the most popular. Sixty-three percent of respondents use training and awareness programs after data breaches, down four points from 2009. Encryption is the second most implemented preventive measure as a result of a data breach, with 61 percent. Both encryption and data loss prevention (DLP) solutions have increased 17 percent since 2008.
- Assess risks by identifying and classifying confidential information
- Educate employees on information protection policies and procedures, then hold them accountable
- Deploy data loss prevention technologies which enable policy compliance and enforcement
- Proactively encrypt laptops to minimize consequences of a lost device
- Integrate information protection practices into businesses processes
"Securing information continues to challenge organizations at all levels, but the vast majority of these breaches are preventable," said Francis deSouza, senior vice president, Enterprise Security Group, Symantec. "Organizations must not only protect the data itself wherever it is stored or used, but also create a culture of security including training, policies and actions. The results of this study show that companies with information protection best practices in place can greatly lower their potential data breach costs."
The U.S. Cost of a Data Breach Study was derived from a detailed analysis of 51 data breach cases with a range of nearly 4,200 to 105,000 affected records. The study found there is a positive correlation between the number of records lost and the cost of an incident. Companies analyzed were from 15 different industries, including finance, retail, healthcare, services, education, technology, manufacturing, research, transportation, consumer, hotels and leisure, media, pharmaceutical, communications, and energy.