Data Breaches Becoming Much More Costly For Companies

Soaring incidences of data breaches are taking a toll over businesses, both in terms of enhanced financial losses and losing customers, a recent study has revealed.

The study, conducted by Ponemon Institute, examined the aftermaths experienced by 43 different US firms that suffered data infringements last year, also unveiled that the businesses losses incurred was around 70 percent of total data breach costs, rose from 54 percent registered a couple of years back.

In addition, the study revealed that the average churn rate - the rate by which customers close down doing businesses with breached company - rose from 2.7 percent recorded in 2007 to 3.6 percent.

The key findings of the research have shown that the cost of data breach has enhanced over the past few years, with an average of around $202 per record, up from $197 as recorded in 2007, and the total cost per breach has reached a whopping $6.6million per breach.

Researchers attributed this increased expenses in data breaches to hackers’ enhanced attacking capabilities to extract useful financial, personal, and corporate information, which they sell over the web.

Phil Dunkelberger, chief exec PGP group, the security firm that collaboratively released the study, cautioned web users by saying, “Data is traded like dollars on the Internet now if you're not going to take precautions”.

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Our Comments

Althought the study highlighted the financial cost of data breaches, it did not cover the other aspects of mishandling your customers data like the loss of trust, customers, goodwill as well as the fact that it will disrupt your cash flow because of investigations that have to be carried out and because of the cost of carrying these investigations

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