Negligent employees top cause of data breaches: study

MOUNTAIN VIEW, USA: Symantec Corp. and the Ponemon Institute today released the findings of the 2011 Cost of Data Breach Study: United States, which reveals negligent insiders are the top cause of data breaches while malicious attacks are 25 percent more costly than other types.

The study also found organizations which employ a chief information security officer (CISO) with enterprise-wide responsibility for data protection can reduce the cost of a data breach by 35 percent per compromised record. The organizational cost of a data breach was $5.5 million last year. The seventh annual Ponemon Cost of a Data Breach report is based on the actual data breach experiences of 49 U.S. companies from 14 different industry sectors.

“This year’s report shows that insiders continue to pose a serious threat to the security of their organizations,” said Francis deSouza, group president, Enterprise Products and Services, Symantec Corp. “This is particularly true as the increasing adoption of tablets, smart phones and cloud applications in the workplace means that employees are able to access corporate information anywhere, at any time. It is essential for companies to put the proper information protection policies and procedures in place to counterbalance these new realities.”

Additional key findings from the report include:

Negligent insiders and malicious attacks are the main causes of data breach. Thirty-nine percent of organizations say negligence was the root cause of the data breaches. For the first time, malicious or criminal attacks account for more than a third of the total breaches reported in this study. Since 2007, they also have been the most costly breaches. Accordingly, organizations need to focus on processes, policies and technologies that address threats from the malicious insider or hacker.

Certain organizational factors reduce the overall cost. If the organization has a CISO with overall responsibility for enterprise data protection the average cost of a data breach can be reduced as much as $80 per compromised record. Outside consultants assisting with the breach response also can save as much as $41 per record. When considering the average number of records lost or stolen, all of these factors can provide significant and positive financial benefits.

Specific attributes or factors of the data breach also can increase the overall cost. For example, in this year’s study organizations that had their first ever data breach spent on average $37 more per record. Those that responded and notified customers too quickly without a thorough assessment of the data breach also paid an average of $33 more per record. Data breaches caused by third parties or a lost or stolen device increased the cost by $26 and $22, respectively.

Detection and escalation costs declined but notification costs increased. Detection and escalation costs declined from approximately $460,000 in 2010 to $433,000 in 2011. These costs refer to activities that enable a company to detect the breach and whether it occurred in storage or in motion.

More customers remain loyal following the data breach. For the first time, fewer customers are abandoning companies that have a data breach. However, certain industries are more susceptible to customer churn, which causes their data breach costs to be higher than the average. Taking steps to keep customers loyal and repair any damage to reputation and brand can help reduce the cost of a data breach.

The cost of data breach declined. For the first time in seven years, both the organizational cost of data breach and the cost per lost or stolen record have declined. The organizational cost has declined from $7.2 million to $5.5 million and the cost per record has declined from $214 to $194.

“One of the most interesting findings of the 2011 report was the correlation between an organization having a CISO on its executive team and reduced costs of a data breach,” said Dr. Larry Ponemon, chairman and founder of the Ponemon Institute. “As organizations of all sizes battle an uptick in both internal and external threats, it makes sense that having the proper security leadership in place can help address these challenges.”

The U.S. Cost of a Data Breach Study was derived from a detailed analysis of 49 data breach cases with a range of nearly 4,500 to 98,000 affected records. It takes into account a wide range of direct business costs, including engaging forensic experts, outsourcing hotline support and providing free credit monitoring subscriptions and discounts for future products and services. Indirect costs include in-house investigations and communication, as well as the extrapolated value of customer loss resulting from turnover or diminished acquisition rates. The average cost of a data breach does not apply to catastrophic breaches (study excludes data breaches of more than 100,000 records) given they are not typical of those experienced in the United States. Companies analyzed were from 14 different industries, including finance, retail, healthcare, services, education, technology, manufacturing, research, transportation, consumer, hotels and leisure, media, pharmaceutical and communications.

Symantec recommends the following information protection best practices:

Assess risks by identifying and classifying confidential information

Educate employees on information protection policies and procedures, then hold them accountable

Implement an integrated security solution that includes reputation-based security, proactive threat protection, firewall and intrusion prevention in order to keep malware off endpoints

Deploy data loss prevention technologies which enable policy compliance and enforcement

Proactively encrypt laptops to minimize consequences of a lost device

Implement two factor authentication

Integrate information protection practices into businesses processes

Companies can analyze their own risk by visiting