Value Company Data- Costs Of Data Breaches Rising

In this age of information, the value of data and intellectual property is very high indeed. It is key for any company to protect not only business trade secrets but customer records as well.

According to Ponemon Institute reports the episodes of data breaches are costing an average of US$197 per lost or stolen customer record during 2007. This is a huge financial impact for any business.

A PC world article notes that organizations that experience data breaches are paying more than ever to recover from the incidents and retain customers once the events become public knowledge, according to a new research report.

Based on their interviews with different organizations, the average total cost of the breaches rose to $6.3 million in 2007, compared to an average of $4.8 million in 2006 with the average number of records exposed in the breaches Ponemon studied was roughly 20,000 per incident, although among those organizations surveyed the incidents ranged from as few as 4,000 records to more than 125,000 records.

What do you lose in a data breach?

• Not only do you lose the actual records, you also incur estimated cost of lost business and so-called customer churn that results from notification of the data breach episodes.
• Your company loses stability. You end up providing customer support and credit monitoring services to affected individuals, along with budgets allocated for advertising and marketing efforts aimed at repairing companies' public images.
  

However the article does end on a positive note for businesses (although not necessarily for clients). Despite the fact that the cost of responding to a data breach has risen consistently over the three years that Ponemon has studied the phenomenon, the expert believes that in time the price of losing customer data will eventually fall.

The researcher said that the sheer volume of incidents will drive customers to become desensitized to the events, resulting in lowered remediation costs and business churn.

"People are already finding that it is hard to trace an incident of ID theft to a specific breach, and with the growing number of notifications they receive, they won't care as much about the problem," Ponemon said. "There seems to be a herd mentality emerging among customers that applies to the law of large numbers; if people feel they are in a pool of millions of others who have had their records stolen or lost, their thinking is that the probability of being victimized isn't as strong."

Data security is key for any business strategy. It is worthwhile to invest time, money and effort to make sure that your clients feel safe and secure doing business with you. In this age of information, the value of this data rises in proportion to the profit businesses expect from clients.