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Cyber Liability: The Cost of a Data Breach

By Dan Hanson

May 7, 2013

One of the most common questions we receive is: ”What is the cost to my organization if I fail to protect the confidential information of others?” One of the most trusted resources for this type of data is the Ponemon Institute.

According to the Ponemon Institute the average cost of a cyber breach now averages nearly $200 per compromised record. As you can see in the chart at right that was taken from the Ponemon Institute's 2011 Cost of Data Breach Study: United States, they estimate the cost was $194 per record lost in 2011 . Also, you will note 2011 was the first year we saw a decline in the cost per record since they started tracking this data in 2005.

It is important to understand what goes into the $194 average cost per record breached as reported by Ponemon. Direct costs account for $59 of the cost. These costs include those necessary for notification, credit monitoring, forensics, public relations and systems fixes. The remainder, or $135 per record are associated with indirect costs such as lost customers, loss of future customers, less frequent purchases by current customers resulting from their loss of faith in the security of your organization.

According to this survey, the cost per record varies by industry. The communications industry has the highest cost per record at $334 per record, while the media industry has the lowest cost per record lost at $89.