Insurers Ponder IT Security as a Competitive Differentiator
As the number of data breaches reported annually continues to surge, the costs incurred by companies that report incidents also are increasing, according to a new study by the Ponemon Institute. In 2007, the average total cost of a breach for a company in any industry was $6.3 million, reports the security and privacy research organization, which surveyed 35 companies across all industries that experienced a data breach during the past year.
Costs ranged from $225,000 per breach to almost $35 million, and the average cost of each compromised record was $197, the Detroit-based Ponemon Institute says. But for firms in the highly regulated financial sector, the cost of a data breach is even higher -- rising to $239 per compromised record.
"The value of the data a financial firm has is much higher than companies in other sectors," explains John Dasher, director of product management at PGP Corp. (Palo Alto, Calif.), which sponsored the survey together with Vontu (San Francisco). "They have personal information such as your account information and your Social Security number." As a result, financial institutions that suffer a data breach typically offer customers credit protection and change their account numbers -- which all adds to the total cost incurred by a company after a breach, Dasher notes.
Also adding to the cost of a data breach is reputational damage control, which is particularly high on the agenda for financial firms, Dasher adds. "If you're in the financial sector, what's more important than your brand when you've spent years trying to build trust with your clients?" he says.
According to the study, in 2007 companies in all industries reported a 3 percent rise in public relations and communications expenses following an incident.
Courtesy of Wall Street & Technology, a CMP Technology property.
Melanie Rodier has worked as a print and broadcast journalist for over 10 years, covering business and finance, general news, and film trade news. Prior to joining Wall Street & Technology in April 2007, Melanie lived in Paris, where she worked for the International Herald ... View Full Bio