Gary Audin
Gary Audin is the President of Delphi, Inc. He has more than 40 years of computer, communications and security...
Read Full Bio >>

Gary Audin | December 16, 2016 |


That Data Breach Will Cost You

That Data Breach Will Cost You A Ponemon Institute study sheds light on the true costs of the average U.S. data breach.

A Ponemon Institute study sheds light on the true costs of the average U.S. data breach.

Yahoo this week disclosed that a 2013 data breach exposed the private information of more than 1 billion Yahoo users, putting into question Verizon's $4.83 billion pending acquisition of the company. As details continue to trickle out about what is being called the biggest data breach in history, it's fair to say that security and data breaches are top of mind this week.

While not every data breach will involve millions or billions of compromised records, any breach of your company's records will certainly cost you. What is your average cost per record for a data breach? If you knew, you could use the cost figure as a benchmark for budgeting for security. The average cost paid for each lost or stolen record containing sensitive and confidential information in 2016 is $221 per record in the U.S., according to a study from Ponemon Institute. The average worldwide cost in 2016 is $158 per record, a 29% increase since 2013.

Studying Data Breach Costs

The June 2016 report mentioned above, performed by Ponemon Institute and sponsored by IBM, is "2016 Cost of Data Breach Study: Global Analysis," and covers global trends and costs of data breaches. It estimates there is a 26% probability you will have a material data breach involving 10,000 lost or stolen records.

There were 383 companies located in 12 countries participating in the study, all of whom experienced a data breach ranging from about 3,000 to more than 101,500 compromised records. A compromised record is one that identifies the individual whose information has been lost or stolen in a data breach.

Identifying and Containing a Data Breach Takes Time

There are some new terms to describe the events of a data breach. Mean Time to Identify (MTTI), measured in days, is used to determine the effectiveness of an organization's incident response processes. The Mean Time to Contain (MTTC) metric measures the time it takes for the responding staff to resolve a situation and finally restore service.

Ponemon Institute estimates the companies in the study, on average, had a MTTI of 201 days, with an extraordinary range of 20 to 569 days. The MTTC, on average, was 70 days, with a range of 11 to 126 days. Taking these two statistics together, this means the average vulnerability time for these companies was 271 days, or about 9 Months.

Detection and Escalation Costs

The detection and escalation event costs were not found to be especially high in the U.S. The highest cost per event is in Canada ($1,600,000) and the lowest in India ($530,000). The U.S. cost was found to be $730,000 per event. This may be due to more investment in the security tools and training. Detection and escalation include assessment, auditing services, forensic and investigative activities, and crisis team management. Do not forget that there will be costs associated with dealing with executive management and the board of directors.

Notification Costs

Once a data breach has been discovered, there will be costs associated with notifying those who may be affected. The notification can help reduce or eliminate the malicious use of the compromised data. Ponemon found that notification costs were the highest in the U.S. ($590,000). Notification activities include the production of contact databases, determining and fulfilling regulatory requirements, dealing with and engaging external experts and consultants, the cost of producing notices and the associated postage, resolving email bounce-backs, and contending with and organizing inbound communications due to the notifications.

Source: Ponemon Institute

After the Breach Expenses

The U.S. leads with the after-breach event costs associated with response and detection ($1,720,000/event). These costs include special investigative activities, help desk activities, supporting inbound communications (calls, emails, chat, IM), problem remediation, legal expenditures, product discount offers for customer retention, third-party identity protection service subscriptions, and regulatory interventions.

Source: Ponemon Institute

Lost Revenue Costs

The U.S. also leads in the lost revenue organizations experienced per event for losing customers after a data breach ($3,970,000). These costs include the customer turnover, increased customer marketing and sales activities (it usually costs more to regain a customer than it costs to obtain them), reputation losses, and reduced goodwill and trust.

Source: Ponemon Institute

Adding Up the Bill for a U.S. Data Breach


When you add all these costs up, the average U.S. bill for a data breach then comes to just over $7 million. How much are you spending in staff time, security tools and services, security consultants, lawyers, and other internal staff? Compare your liability at $221 per record to what is presently budgeted. You may be able to use the potential liability costs to leverage a larger security budget.

Trend Predictions, Lessons Learned

The report authors looked at the trends observed since 2013 in every industry, outlining seven global megatrends:

  1. The cost of a data breach globally has remained relatively stable over time, leading to the conclusion that this is a permanent cost to organizations. Organizations have to be prepared to deal with and integrate their data protection strategies into every line of business.
  2. Lost business is the biggest financial consequence to organizations that experienced a data breach. Organizations need to institute processes to retain customers' trust to limit the long-term financial impact.
  3. Data breaches continue to be caused most often by criminal and malicious attacks, which take the most time to detect and resolve. These attacks produce the highest cost per record.
  4. The longer the detection and resolution times are, the more costly the resolution. To counter this situation, investments should be made in technologies and developing better in-house expertise.
  5. Regulated industries, healthcare and financial services, experience the most costly data breaches. This is due to fines and penalties and the higher rate of lost business and customers.
  6. Organizations need to improve data governance to reduce the costs of data breaches. Implementing incident response plans, appointing a CISO who has authority not just responsibility, conducting continuous employee training, producing awareness programs with penalties, and having a business continuity management strategy will all help in reducing data breach costs.
  7. Invest in certain data loss prevention controls and activities like encryption and endpoint security solutions. The 2016 study revealed a reduction in the cost when companies participated in threat sharing and deployed data loss prevention technologies.

For more on the topic of sharing threat data, see my other recent No Jitter article, "Cybersecurity Sharing: Think Before You Participate."


Enterprise Connect Orlando 2018
March 12-15 | Orlando, FL

Connect with the Entire Enterprise Communications & Collaboration Ecosystem

Stay Up-to-Date: Hear industry visionaries in Keynotes and General Sessions delivering the latest insight on UC, mobility, collaboration and cloud

Grow Your Network: Connect with the largest gathering of enterprise IT and business leaders and influencers

Learn From Industry Leaders: Attend a full range of Conference Sessions, Free Programs and Special Events

Evaluate All Your Options: Engage with 190+ of the leading equipment, software and service providers

Have Fun! Mingle with sponsors, exhibitors, attendees, guest speakers and industry players during evening receptions

Register now with code NOJITTEREB to save $200 Off Advance Rates or get a FREE Expo Pass!

March 7, 2018

Video collaboration is experiencing significant change and innovation-how can your enterprise take advantage? In this webinar, leading industry analyst Ira Weinstein will present detailed analysis

February 21, 2018

Business agility has become the strongest driver for enterprises to begin migrating their communications to the cloud-and its a benefit that enterprises are already realizing. To gain this benefit

February 7, 2018

Enterprises are starting to grasp the critical importance of security and compliance in their team collaboration deployments. And once the risks are mitigated, your enterprise can integrate these n

March 12, 2018
An effective E-911 implementation doesn't just happen; it takes a solid strategy. Tune in for tips from IT expert Irwin Lazar, of Nemertes Research.
March 9, 2018
IT consultant Steve Leaden lays out the whys and how-tos of getting the green light for your convergence strategy.
March 7, 2018
In advance of his speech tech tutorial at EC18, communications analyst Jon Arnold explores what voice means in a post-PBX world.
February 28, 2018
Voice engagement isn't about a simple phone call any longer, but rather a conversational experience that crosses from one channel to the next, as Daniel Hong, a VP and research director with Forrester....
February 16, 2018
What trends and technologies should you be up on for your contact center? Sheila McGee-Smith, Contact Center & Customer Experience track chair for Enterprise Connect 2018, gives us the lowdown.
February 9, 2018
Melanie Turek, VP of connected work research at Frost & Sullivan, walks us through key components -- and sticking points -- of customer-oriented digital transformation projects.
February 2, 2018
UC consultant Marty Parker has crunched lots of numbers evaluating UC options; tune in for what he's learned and tips for your own analysis.
January 26, 2018
Don't miss out on the fun! Organizer Alan Quayle shares details of his pre-Enterprise Connect hackathon, TADHack-mini '18, showcasing programmable communications.
December 20, 2017
Kevin Kieller, partner with enableUC, provides advice on how to move forward with your Skype for Business and Teams deployments.
December 20, 2017
Zeus Kerravala, principal analyst with ZK Research, shares his perspective on artificial intelligence and the future of team collaboration.
December 20, 2017
Delanda Coleman, Microsoft senior marketing manager, explains the Teams vision and shares use case examples.
November 30, 2017
With a ruling on the FCC's proposed order to dismantle the Open Internet Order expected this month, communications technology attorney Martha Buyer walks us through what's at stake.
October 23, 2017
Wondering which Office 365 collaboration tool to use when? Get quick pointers from CBT Nuggets instructor Simona Millham.
September 22, 2017
In this podcast, we explore the future of work with Robert Brown, AVP of the Cognizant Center for the Future of Work, who helps us answer the question, "What do we do when machines do everything?"
September 8, 2017
Greg Collins, a technology analyst and strategist with Exact Ventures, delivers a status report on 5G implementation plans and tells enterprises why they shouldn't wait to move ahead on potential use ....
August 25, 2017
Find out what business considerations are driving the SIP trunking market today, and learn a bit about how satisfied enterprises are with their providers. We talk with John Malone, president of The Ea....
August 16, 2017
World Vision U.S. is finding lots of goodness in RingCentral's cloud communications service, but as Randy Boyd, infrastructure architect at the global humanitarian nonprofit, tells us, he and his team....
August 11, 2017
Alicia Gee, director of unified communications at Sutter Physician Services, oversees the technical team supporting a 1,000-agent contact center running on Genesys PureConnect. She catches us up on th....
August 4, 2017
Andrew Prokop, communications evangelist with Arrow Systems Integration, has lately been working on integrating enterprise communications into Internet of Things ecosystems. He shares examples and off....
July 27, 2017
Industry watcher Elka Popova, a Frost & Sullivan program director, shares her perspective on this acquisition, discussing Mitel's market positioning, why the move makes sense, and more.
July 14, 2017
Lantre Barr, founder and CEO of Blacc Spot Media, urges any enterprise that's been on the fence about integrating real-time communications into business workflows to jump off and get started. Tune and....
June 28, 2017
Communications expert Tsahi Levent-Levi, author of the popular blog, keeps a running tally and comprehensive overview of communications platform-as-a-service offerings in his "Choosing a W....
June 9, 2017
If you think telecom expense management applies to nothing more than business phone lines, think again. Hyoun Park, founder and principal investigator with technology advisory Amalgam Insights, tells ....
June 2, 2017
Enterprises strategizing on mobility today, including for internal collaboration, don't have the luxury of learning as they go. Tony Rizzo, enterprise mobility specialist with Blue Hill Research, expl....
May 24, 2017
Mark Winther, head of IDC's global telecom consulting practice, gives us his take on how CPaaS providers evolve beyond the basic building blocks and address maturing enterprise needs.
May 18, 2017
Diane Myers, senior research director at IHS Markit, walks us through her 2017 UC-as-a-service report... and shares what might be to come in 2018.
April 28, 2017
Change isn't easy, but it is necessary. Tune in for advice and perspective from Zeus Kerravala, co-author of a "Digital Transformation for Dummies" special edition.
April 20, 2017
Robin Gareiss, president of Nemertes Research, shares insight gleaned from the firm's 12th annual UCC Total Cost of Operations study.
March 23, 2017
Tim Banting, of Current Analysis, gives us a peek into what the next three years will bring in advance of his Enterprise Connect session exploring the question: Will there be a new model for enterpris....
March 15, 2017
Andrew Prokop, communications evangelist with Arrow Systems Integration, discusses the evolving role of the all-important session border controller.
March 9, 2017
Organizer Alan Quayle gives us the lowdown on programmable communications and all you need to know about participating in this pre-Enterprise Connect hackathon.
March 3, 2017
From protecting against new vulnerabilities to keeping security assessments up to date, security consultant Mark Collier shares tips on how best to protect your UC systems.
February 24, 2017
UC analyst Blair Pleasant sorts through the myriad cloud architectural models underlying UCaaS and CCaaS offerings, and explains why knowing the differences matter.
February 17, 2017
From the most basics of basics to the hidden gotchas, UC consultant Melissa Swartz helps demystify the complex world of SIP trunking.
February 7, 2017
UC&C consultant Kevin Kieller, a partner at enableUC, shares pointers for making the right architectural choices for your Skype for Business deployment.
February 1, 2017
Elka Popova, a Frost & Sullivan program director, shares a status report on the UCaaS market today and offers her perspective on what large enterprises need before committing to UC in the cloud.
January 26, 2017
Andrew Davis, co-founder of Wainhouse Research and chair of the Video track at Enterprise Connect 2017, sorts through the myriad cloud video service options and shares how to tell if your choice is en....
January 23, 2017
Sheila McGee-Smith, Contact Center/Customer Experience track chair for Enterprise Connect 2017, tells us what we need to know about the role cloud software is playing in contact centers today.