Following recent news that three major South Korean credit issuers have been suspended by the country’s financial watchdog due to a massive data breach, this blog will look into the real cost to business of a data breach.
For the 6th year running the average UK data breach cost has risen – this time by 16.5% from £1.75m to £2.04m in 2013. As a result the danger of a breach is back on the agenda for most data centric organisations. According to the latest research by Symantec Corp. & Ponemon Institute in the 2013 Cost of Data Breach Study, the average UK firm could be liable for costs of over £2 million should it fall foul to employee negligence or malicious attacks.
The prospect of private customer data getting into the wrong hands is becoming an increasingly concerning reality for many organisations across the UK and abroad. The costs involved in protecting data from a breach are not insignificant, but should a breach occur, the bill can be much larger.
Recent discussions have seen EU Justice Commissioner, Viviane Reding, push for much tougher fines for institutions breaching EU data privacy laws. She is quoted as saying that under her new plans for privacy failings, Google would owe $1bn for breaking Spanish data protection laws.
So with Governmental and regulatory pressure along with hiking costs, the heat is on organisations to protect vulnerable databases and educate employees in safeguarding vital data from catastrophe.
According to the report, the most costly data breaches are those malicious and criminal, as with the recent South Korean breaches - where it is believed a temporary employee of the KCB stole data via a USB stick and sold the information to phone marketers.
Across all nine countries covered by the research, malicious and criminal attacks are a key factor in 34% of all cases surveyed. The number of breached records per incident averaged at 23,647, with German and U.S companies having the most costly breaches at $199 and $188 per record, respectively. Organisations most susceptible to data breaches include those in the financial, pharmaceuticals and communications industries, partly due to the sheer amount of data these industries hold.
However, it is concerning that employee negligence continues to be the most common cause of data loss. This involves anything from employees losing devices containing confidential information to failing to adhere to best practice and securing data as it is received by the business. With employees increasingly exploiting the trend of BYOD and with data being transferred unsecured across the internet, lost on USB or other portable devices or misplaced within personal devices – it is vital that any incident response plan accounts for these types of external mishaps in addition to the protection of internal data.
The on-going costs related to business reputation are also considerable. The study reveals that fewer customers are remaining loyal to businesses that have been the subject of a breach which resulted in a loss of information. Increasingly, companies dealing with a previously ‘breached’ organisation are taking their business elsewhere.
It is therefore critical that businesses take the appropriate measures to reduce the impact of potential breaches - including training employees and having an incident response plan in place should anything untoward occur. Implementing these measures well in advance will reduce the cost to the business in the long run.