What Are the Actual Costs of a Data Breach?
A data breach is a costly occurrence for any business — and the cost is rising. According to a Ponemon Institute news release about its 2015 Cost of Data Breach Study, the cost to businesses suffering a data breach has been increasing over the past 5 years. IBM, sponsor of the study, reports that the average total cost of a data breach is $3.8 million and the average cost of each sensitive or confidential record stolen ranges between $145 and $154. These figures represent a 23% increase in cost from 2013.
Factors Included in the Cost of Data Breach
The U.S. Cost of Data Breach Study is conducted annually by Ponemon Institute. Researchers track a wide range of factors contributing to the cost of data breach to businesses, including:
- Notification and response
- Reputation management
- Customer support
- Customer defection
- Lost opportunities
Findings Regarding the Cost of Data Breach
In the Cost of Data Breach Study, Ponemon researchers analyzed 45 data breach cases from 15 different industries involving 5,000 to 101,000 affected records. They found a definite correlation between the number of records lost and the cost of the data breach. The most expensive data breach occurrence cost almost $31 million, and the least expensive cost $750,000.
Ponemon researchers also found that:
- Malicious attacks and botnets were the most severe and costly type of data breach.
- The pharmaceutical, communications, and healthcare industries had the highest churn rates, followed by financial services and services.
- Negligent insider breaches have decreased in cost and number, probably attributable to employee training and awareness programs.
- 42% of all data breach cases are accounted for by third-party organizations.
Reasons for Rising Data Breach Costs
As stated in article on Reuters, the cost of data breaches is rising as sophisticated thieves go after valuable financial and medical records. The healthcare industry has the highest risk, with an average cost as great as $363 per lost or stolen record. A representative of IBM quoted in the article claimed that most data breaches occur through organized crime and are perpetrated by well-staffed and well-funded groups.
IBM reports that lost business is potentially the most severe financial consequence of a data breach. Consumers are becoming more aware of identity theft and are more concerned about the security of their personal data after a breach.
Legal Assistance with a Data Breach in California
If your business has suffered a data breach, you will need an experienced legal professional to help you weather the storm. At McCune Wright Arevalo, LLP, we have the knowledge and resources to handle general complex litigation and any legal matters that may arise due to an incursion.
Our attorneys have extensive complex litigation experience and a history of success on behalf of our clients. We have the staff and resources to litigate any size complex litigation matter. Contact us to discuss how we can help your business when a data breach has occurred.