Security: Malicious Data Breaches Expensive, and on the Rise

Security lapses or data breaches involve the exposure of information to unprivileged individuals.  Data breaches sometimes happen inadvertently, typically as a result of user error or software flaw, but data breaches can be and frequently are malicious.  While no type of data breach should be tolerable, recovery from inadvertent breaches is typically less costly than from a malicious one.

An annual study by the Ponemon group tries to quantify the extent of the costs and frequency of data breaches.  The annual update to their study has recently been made available, and the numbers are troubling.  The cost of recovering from a single data breach has jumped 7 percent from the previous year to more than $7.2 million with an average cost of $214 per compromised record.

The Ponemon study found that the biggest cause of breaches was simply negligence.  41 percent of breaches were attributed to employee negligence.  Poor planning and poor controls often account for inadvertent errors to occur.

Nearly 31 percent of data breaches were the result of a malicious attack.  That number has been climbing dramatically over the past two years.  In 2009, 24 percent of data breaches were malicious, and in 2008, only 12 percent were malicious.  Malicious breaches were generally either the result of malware infiltrations or via the lower-tech route of social engineering.  Recovery from malicious data breaches by far are most costly than recovery from a breach that is inadvertent.

Much of the cost involved in recovering from a data breach involves sending notification to individuals whose information has been compromised.  Many new regulations, such as HIPAA and HITECH, require organizations to notify individuals promptly when a breach occurs, or else be subject to high fines for slow action.  Interestingly though the report found that organizations that respond too quickly often ended up paying more because they often overestimated the extent of the problem and even notified people that may not have been effected by the breach.  It is important to not to be slow to respond, but it is also important to try to gather as full a picture of the nature and extent of the breach before devising a remedy for it.

The Ponemon report also showed that many organizations  are beginning to realize the extent and impact that a data breach can have on both their reputation and their bottom line.  For example, proactive investment in tools to prevent data breaches has risen by 72 percent.  The cost saved in preventing a single data breach can easily cover the costs of investment in preventative tools.