Access and Feeds

Security: Why are Data Breaches so Expensive?

By Dick Weisinger

Data breach costs have relentlessly be on the rise over the past years. For large companies the cost to remediate the effect of a data breach averages now into many millions of dollars, particularly in the US where the cost to remediate a data breach is the highest in the world.

There are both direct and indirect costs related to data breaches:

  • Direct Costs
    • Costs related to detecting and notifying affected parties of the incident
    • IT time spent resolving the breach
    • Sales revenue lost due to system downtime and business disruption
    • If a public company, a likely drop in stock price
    • Legal fees and costs of litigation
    • Possible financial theft
    • Fees to investigate root cause of the problem using forensics and auditing
    • Fees for public relations, help desk, and setting up post-breach response, like an emergency call center
    • Fees for providing credit monitoring services for customers
    • Penalties and Regulatory fines
    • Greater investment in security measures to avoid future incidents
  • Indirect Costs
    • Reputational damage
    • Loss of consumer trust
    • Missed business opportunities
    • Declines in productivity
    • Possible IP theft
    • Employees may leave the organization

Charles Debeck, senior threat analyst at IBM X-Force IRIS, said that “we see an increasing divergence between organizations that take effective cybersecurity precautions versus orgs that don’t. This divergence has been increasing year over year; the organizations that are engaging in effective cybersecurity practices are seeing significantly reduced costs, the organizations that aren’t engaging in these same practices are facing significantly higher costs.”

Digg This
Reddit This
Stumble Now!
Buzz This
Vote on DZone
Share on Facebook
Bookmark this on Delicious
Kick It on
Shout it
Share on LinkedIn
Bookmark this on Technorati
Post on Twitter
Google Buzz (aka. Google Reader)
One comment on “Security: Why are Data Breaches so Expensive?
  1. A company’s chief financial officer (CFO) is the one responsible for keeping the company running within the allotted budget. A data breach can throw a company’s budget off balance. For example, ransomware is a type of malicious software or malware that encrypts a victim’s data, after which the attacker demands a ransom, hence the name ransomware. Suppose a company was to be attacked by this malicious software. In that case, the decision lies with the CFO on whether they would pay the ransom.

Leave a Reply

Your email address will not be published. Required fields are marked *