Monday, February 1, 2010

Report: Data Breach Costs On The Rise

The cost of a data breach rose slightly last year as malicious attacks and botnets increased in number, according to a report from the Ponemon Institute.

The annual "Cost of a Data Breach Survey," released Monday, said such incidents cost U.S. companies an average of $204 per compromised customer record in 2009, compared to $202 in 2008.

The average total organizational per-incident costs rose slightly in 2009 to $6.75 million, compared to an average per-incident cost of $6.65 million in 2008, despite an overall drop in the number of reported breaches. The total number of data breaches dipped in 2009 to 498, down from 657 in 2008, the study said, citing a report from the Identity Theft Resource Center.

Larry Ponemon, chairman and founder of the Ponemon Institute, said that customer churn rate comprised the "lion's share" of the costs for organizations following a data breach. Much of those costs were due to increased recruitment and marketing expenses incurred by companies due to an upsurge of customer attrition following a breach. "People do leave. It reduces the brand of an organization, and increases acquisition costs of new customers," he said.

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