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Ponemon: Data breach costs now average US$154 per record

Maria Korolov | May 28, 2015
According to a report released this morning by IBM and the Ponemon Institute, the per-record cost of a data breach reached $154 this year, up 12 percent from $145 in 2014.

According to a report released this morning by IBM and the Ponemon Institute, the per-record cost of a data breach reached $154 this year, up 12 percent from $145 in 2014.

In addition, the average total cost of a single data breach rose 23 percent to $3.79 million.

This is a dramatically different result then Verizon's 58 cents per average record breached estimate which came out last month.

Verizon's calculation, which was part of their annual data breach investigations report, was based on 191 cyber insurance claims.

However, insurance claims don't show the whole picture, said Ponemon Institute chairman and founder Larry Ponemon.

Companies usually don't have enough insurance coverage to cover the total cost of a breach, he said, and the insurance doesn't cover indirect costs or loss of business.

For example, he said, Target's latest breach is estimated to cost the company over $1 billion, but it was only insured for $100 million.

In general, he said, companies buy enough insurance to cover 50 percent of the value of their fixed assets — but only 12 percent of the value of their digital assets.

Loss of business is also a significant, and growing, part of the total cost of a data breach. Higher customer turnover, increased customer acquisition costs, and a hit to reputations and goodwill added up to $1.57 million per company, up from $1.33 million the previous year.

"We spent a lot of time building an analytical model based on real costs," he said, adding that Ponemon has been collecting this data for ten years. This year, Ponemon analyzed results from 350 companies in 11 countries, each of which had suffered a breach.

Finally, he said, Verizon's regression analysis, while interesting, is based on a very small number of data points which are also not necessarily statistically representative.

"But the main part of the Verizon data breach investigations report is very interesting," he said, advising that the company focus on that in the future. "They should stick to their knitting."

Caleb Barlow, vice president at IBM Security

At a minimum, a company with a data breach has to send out letters notifying customers that they were breached, said Caleb Barlow, vice president at IBM Security, and pay for credit monitoring.

"Normally, Verizon does some great work," he said, "But we had to discount this because 58 cents doesn't even cover the cost of the postage and printing the letter."

Health care racks up highest costs

According to the Ponemon report, data breach costs varied dramatically by industry and by geography.

The US had the highest per-record cost, at $217, followed by Germany at $211. India was lowest at $56 per record.

 

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