The cost of a compromised record

According to a new article on TechTarget, a study by the Ponemon Institute has revealed the cost of a data breach has increased once again, to $204 per compromised record. The study is available for download at http://www.encryptionreports.com/ after giving away some personal details.

The “Fifth Annual U.S. Cost of Data Breach Study,” funded in part by encryption vendor PGP Corp., determines the annual cost of the breach by establishing a company’s cost of lost business as a result of an incident; expenses incurred by notifying individuals and authorities of a breach; costs associated with legal fees and consulting firms and new investments made in technology and employee education.

In our down economy, it is interesting that the cost of data breaches have been rising for five years running.  If I were cynical, I might suggest that one of the reasons for the constantly increasing costs in this study is the partnership with PGP, who sells products designed to protect you in the case of a lost laptop or storage device.

That said, I’m not even sure that those items above can accurately represent the cost of data breaches, especially in certain environments.  The loss or damage of reputation caused by a data breach can be so devastating that the monetary cost can’t even be calculated.  If you don’t know what I’m talking about, what is the first thing that comes to your mind when I mention Heartland Payment Systems, TJX, or the Department of Veterans Affairs?  These organizations have suffered tremendously because of wide (and widely publicized) data breaches.  Imagine the firestorm of criticism if some of the most trusted companies were to suffer data breaches along the lines of Heartland’s breach?

In addition to the loss of reputation, what are other costs of data breaches that the Ponemon study doesn’t reveal? Let us know in the comments.