Two new reports shed some light on the costs of security breaches and their growing pace
On Dec. 19, 2013, the huge home chain store target, has announced a serious a data breach at its servers. “In mid-December 2013, we learned criminals forced their way into our system, gaining access to guest credit and debit card information”, said the company.” As the investigation continued, it was determined that certain guest information was also taken. The information included names, mailing addresses, email addresses or phone numbers. We have partnered with a leading third-party forensics firm who is thoroughly investigating the breach”.
Here are the numbers of that catastrophic event for target: 40 million – The number of credit and debit cards thieves stole from Target. 70 million – The number of records stolen that included the name, address, email address and phone number of Target shoppers. 46 – The percentage drop in profits at Target in the fourth quarter of 2013, compared with the year before. 200 million – Estimated dollar cost to credit unions and community banks for reissuing 21.8 million cards — about half of the total stolen in the Target breach. 100 million – The number of dollars Target says it will spend upgrading their payment terminals to support Chip-and-PIN enabled cards.
The cost for target in terms of falling sales revenue, was staggering, and a new study by Javelin Strategy & Research offer some insight into how serious data breech can be. The survey published last week, reveals that of people who had their information exposed in a breach, 33 percent of consumers will shop elsewhere if their retailer of choice is breached. In addition, 30 percent of patients will find new healthcare providers if their hospital/doctor's office is breached, and 25 percent of consumers will switch bank/credit card providers in the aftermath of a breach.
If these numbers don’t mean anything to companies, it is because most of them are still not fully aware to the financial losses that can occur from such practices. "That’s real money lost in customer churn and reduced sales, and certainly demonstrates how the reputation of the organization hits the bottom line," said Al Pascual, senior analyst of security, risk and fraud at Javelin Strategy & Research. "It’s noteworthy that about a third of people will go as far as to find a new doctor, if their provider is breached, as we all know healthcare services can be a big hassle to change."
No decrease in sight
The words of Pascual and the new study are backed by another report published last week by SafeNet. According to SafeNet's "Breach Level Index," the pace of compromised data in Q1 amounted to approximately 93,000 records per hour, a 233 percent increase over the same quarter in 2013. Interestingly, despite the discussion above, in Q4 2013, the retail industry accounted for just 1 percent of the records lost in Q1, and just 10 percent of the breaches.
The financial industry was hit hardest during Q1, accounting for 58 percent of records lost. The technology industry accounted for 20 percent of lost records. The healthcare industry was hit hard in terms of breach events, accounting for 24 percent of all breaches, but only 9 percent of data records lost.
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