In our post about third-party security risks last week, we briefly mentioned the cost of data breaches caused by third-party vendors. Something we haven’t talked much about until this point, however, is the true cost of data breaches to your business.
So for anyone out there who isn’t sure about the risks to your business that come along with a data breach, let’s take a look at some hard numbers to put things into perspective.
By the numbers
As our source, we’re using a study by the Ponemon Institute from last year detailing the cost of data breaches in 2011. More than 400 individuals were interviewed from 268 organizations, so these numbers are based off of real situations.
The study had a few key findings that are of use here:
- The average organizational cost of a data breach was $5.5 million over seven years. Though this is down from the previous year, it’s still astoundingly expensive.
- Lost business costs (turnover of customers, reputation loss, etc.) were an average of $3 million over seven years.
- Direct costs of a data breach declined, but indirect costs increased, with both totaling about $194 per record lost.
It’s easy to see how quickly these numbers add up. If you’re a small business and are involved in a data breach, your business could fail as a result of high costs, and in general, it’s absolutely essential to do everything in your power to avoid such an occurrence.
There are other things to consider when evaluating the dangers and costs of a data breach. For instance, your business also has to think about:
- Monetary penalties that may result from a breach
- The cost to your consumers if you lose their data
- Damage to your business’ reputation (before even considering monetary loss)
The risks to your business in the event of a data breach are huge, and it’s important to make sure you’re prepared. If you’re still not convinced, take a look at this calculator of costs associated with a data breach. Typing in a few numbers (for example, how many records were lost and what type) shows how things can get expensive quickly.
To make sure you’re doing everything you can to protect your business from a data breach and the enormous costs that go along with it, contact DataShield today. We offer compliance consulting to ensure compliance with laws on data protection, which is the first step to preventing data breaches.