Nearly 68 per cent higher than 2007
Security outfit Symantec and beancounters at the Ponemon Institute revealed that the average cost of a data breach has risen for the fifth consecutive year. The 2011 Annual Study: UK Cost of a Data Breach found that the average cost per capita of a data breach rose to £79 per record, up from £71 in 2010 and 68 percent higher than £47 in 2007. Notably, negligent employees or contractors pose the biggest risk to organisations, responsible for over a third (36 percent) of all data breaches.
Despite a rise in cost per record, the report also disclosed that the actual organisational cost of a breach has, in fact, declined from £1.9 million in 2010 to £1.75 million in 2011, suggesting that businesses have improved performance in both preparing and responding to data breaches. Data breaches cost companies an average of £79 per compromised record – of which £37 pertains to indirect costs such as lost business, reputational damage or churn of existing customers.
Mike Jones, Senior Product Marketing Manager, Symantec said that he was noticing that companies at risk of data loss are becoming wise to the financial impact of a data breach. These businesses are implementing steps not just to prevent loss but to mitigate the damage, should a breach occur. The Ponemon Institute took into consideration the costs of the actual data loss related to records, in recent years there has also been an increased consciousness amongst businesses that valuable intellectual property and private communications can present a great source of risk to a company’s financial stability. In addition, the report shows a large proportion of data breaches are caused by individual negligence.
The report indicates that fewer records are being lost in breaches and businesses that do suffer data loss are less likely to be abandoned by customers, with the average abnormal churn decreasing from 3.3 percent in 2010 to 2.9 percent. Some industries, such as financial services or pharmaceutical companies, remain more susceptible to customer churn, causing the cost of their data breaches to be higher than the average.