It is widely acknowledged that data breaches can have a tremendously negative impact on both an organization and those customers and clients whose information has been lost, stolen or exposed. In recent years, companies have increased their efforts to prevent these incidents from occurring. Among other solutions, firms have invested in antivirus and antimalware programs, which can undoubtedly play a powerful role in reducing the risk of a breach.
However, many organizations still do not fully appreciate the risks inherent to data breaches, and consequently do not devote sufficient resources to their prevention. While they understand that data breaches are to be avoided, the abstract nature of the threat makes it difficult to quantify just how serious the consequences of a breach will be.
A recent study may shed some light on the true costs of data breaches, providing further evidence of the need for high-grade data protection and secure file transfer solutions.
A costly breach
The breach in question occurred last year, when the Utah Department of Health's server was illegally accessed. Personal data for 780,000 residents was stolen, including Social Security information for more than one-quarter of a million participants in the state's Medicaid and Child Health Insurance Program.
The state has already spent approximately $9 million following the breach, with most of this money going toward security audits and upgrades, as well as providing credit monitoring for those affected.
Recently, a study conducted by Javelin Strategy & Research revealed that there will be significantly more costs stemming from the breach. The analysis predicts that more than 120,000 cases of fraud will ultimately develop as a direct result of the stolen information. Furthermore, the report found that each of these victims will spend an average of $770 and 20 hours resolving the fraud. All told, each incident is likely to result in $3,300 in losses.
"Data breaches are precursors to fraud, and failing to protect [personally identifiable information] exposes everyone to pain," explained Al Pascual, a senior analyst of security, risk and fraud at Javelin Strategy & Research in a blog post.
Pascual suggested that this breach is evidence of the need for greater data protection strategy and resources. He noted that while encryption tools and other solutions may cost a firm a fair amount of money, these expenses are minor compared to the costs which result from breaches.
As this incident revealed, data breaches often carry with them much greater costs than are immediately apparent. Cybercriminals are becoming less interested in direct financial theft and more focused on stealing sensitive information which can be used to commit fraud or espionage.
Additionally, when individuals' information is exposed in a breach, they inevitably become less enamored with the organization. This can lead to lost customers and a tarnished reputation for all organizations, private and public.
That is why firms of all kinds should invest in high-quality managed file transfer solutions to ensure their data is safe while in transit, as well as data security tools to protect stored data.