Cost of a compromised customer record - $200
by David Merrill on January 26, 2010
A great article from CIO Magazine online, citing a Ponemon Institute study on the cost of a security breach. This $200 per customer record is broken down into several cost factors:
- the cost of lost business because of an incident
- legal fees
- disclosure expenses related to customer contact and public response
- consulting help
- remediation expenses such as technology and training
The study goes on to outline the primary sources of the problems (stolen laptops is #1), but also included is the rising number of incident (24% last year) of malicious and criminal attacks to the IT infrastructure. The report also correlates a higher cost of a compromised client record when there is not a Chief Risk Office in the IT organization that looks after protection, remediation and proactive efforts to reduce the attacks and costs of the risks.
The cost of risk and the cost of security are both included in HDS’ Storage Economics methods, and are part of the 33 types of storage ownership costs. I have not seen this report and level of detail that dollarizes the cost at the client record level before. Perhaps because not many companies want to come forward and acknowledge the breach and the costs associated… down to the customer record. Understanding risks and the potential costs of the risk is often the first step to make investments to protect and to serve (sounds like a 70’s cop show). Defining costs of risk at a micro and macro level are essential to develop business impact, payback and cost avoidance justifications for management.
The one cost that is not mentioned, the cost of customer confidence, is probably…. priceless. Now I sound like a credit card commercial.
