A report published by Ponemon Institute, a Privacy and information management research firm and sponsored by encryption specialist PGP Corporation and security outfit Symantec shows that a single data breach for UK companies costs on average £1.4 million.
The study, the 2007 Annual Study: UK Cost of a Data Breach also shows that most of the 'cost' related to a breach is linked to reduced consumer trust and the associated financial impact.
Researchers talked to 21 UK companies and compiled data about how much breaches actually cost them and they found out that on average, the cost of a single record breached is £47, out of which 36 percent is lost immediately after the disaster.
The cost of the breaches and the number of records lost varied greatly; one of the companies surveyed though had lost 125,000 records at a cost of £3.8m.
Ponemon studied customer turnover rates and found out that high customer turnover was a direct consequence of lost records, which results in a decrease in revenues combined with a push for increasing marketing expenditure as breached firms scramble to attract more customers.
ZDnet reports that loss of laptops and other devices come on top of the data breach causes followed by loss of paper records, both accounting for 60 percent of cases.
Although encryption would help in the case of loss data, it would have little impact on the cost of recovering the actual missing data.
The report also found out crime-motivated breaches accounted for only 12 percent of breaches with the overwhelming majority caused by human errors.