Costs of a Breach

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Breached organizations experienced a number of negative consequences, which ultimate include financial loses, but also less direct loses including a decline in their brand value and potentially a loss of customers. Total estimated cost from data breaches worldwide in 2012 are cited at an estimated $8.1 billion dollars, with an average of $194 per record. Data breaches are not isolated events exclusive to large organizations and the impact to a small company can have devastating events. According to a study released in 2011, nearly 72% of breaches involved organizations with 100 or fewer employees. The median cost for downtime associated with a breach was $12,500 per day. Beyond the punitive costs of violating regulations, if an organization is proven negligent, a breach can have a far-reaching effects. Risks associated with breach include:

  • Loss of customers and revenue
  • Negative publicity in the blogosphere and through media outlets.
  • Release of personal private information
  • Diminishment of customers’ and business partners’ trust and confidence
  • Lawsuits by affected parties and regulatory fines resulting in severe financial losses

Organizations pay a steep price in the wake of a breach. Some regulatory bodies mandate breached organizations undergo a lengthy audit to determine if proper measures have been instituted to prevent another breach. If the compromised data is related to personally identifiable information, organization may choose to cover the cost of personal credit counselling or monitoring in an effort to minimize the effect of identity fraud or theft related to the breach.

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