Ponemon: Data breach costs now average $154 per record

According to a report released this morning by IBM and the Ponemon Institute, the per-record cost of a data breach reached $154 this year, up 12 percent from last year’s $145.

In addition, the average total cost of a single data breach rose 23 percent to $3.79 million.

Loss of business was a significant, and growing, part of the total cost of a data breach. Higher customer turnover, increased customer acquisition costs, and a hit to reputations and goodwill added up to $1.57 million per company, up from $1.33 million the previous years, said Ponemon Institute chairman and founder Larry Ponemon.

Ponemon analyzed results from 350 companies in 11 countries, each of which had suffered a breach over the past year.

Data breach costs varied dramatically by industry and by geography.

The US had the highest per-record cost, at $217, followed by Germany at $211. India was lowest at $56 per record.

Sorted by industry, the highest costs were in the health care industry, at an average of $363 per record.

The reason, said Caleb Barlow, vice president at IBM Security, is because the information in a medical record has a much longer shelf life than that of, say, a credit card number.

“With credit cards, the time frame from the breach to mitigation is very short,” he said.

The credit card company just has to cancel the old credit card number and issue a new one.

“But the health care record can be used to establish access in perpetuity,” he said, pointing out that health care records include a wealth of personal information as well as social security numbers and insurance numbers.

“it can be used to establish credit or steal your identity ten or fifteen years from now,” he said. “Once this information is out there, you can’t get the genie back in the bottle.”

And that doesn’t even include the costs of health care fraud, he added.

Factors that can impact breach costs

The Ponemon report looked at a number of other factors that could potentially influence the cost of a breach, and, unlike industry or geography, many of these factors were under management control.

For example, having an incident response team available ahead of time reduced the per-record cost by $12.60. Using encryption extensively reduced costs by $12. Employee training reduced costs by $8.

If business continuity management personnel were part of the incident response team, costs fell by $7.10. CISO leadership lowered costs by $5.60, board involvement lowered costs by $5.50 and cyberinsurance lowered costs by $4.40.

“Companies that have thought about this ahead of time, that had their board involved, that had insurance protection, that had practiced what they would do, they had a much lower cost per breach,” said Barlow. “This is really compelling. We have tangible evidence that those who were doing that had much lower costs. You don’t have days to respond — you don’t even have hours. You have minutes to get your act together.”

Factors that increased costs was the need to bring in outside consultants, which added $4.50 per record. If there were lost or stolen devices, costs increased by an average of $9 per record.

And the single biggest factor was if a third party was involved in the cause of a breach. That increased the average per-record cost by $16, from $154 to $170.

Costs rise with time

Ponemon found a positive relationship between the time it took to identify a breach and the total cost of the breach, as well as between the time it took to mitigate the breach and the cost.

On average, it took respondents 256 days to spot a breach caused by a malicious attacker, and 82 days to to contain it.

Breaches caused by system glitches took 173 days to spot and 60 days to contain. Those caused by human error took an average of 158 days to notice, and 57 days to contain.