Data breaches at Target, eBay, AT&T and most recently PF Chang’s – along with the fear of identity theft — have dramatically increased demand for credit monitoring.
If your business experienced a data breach today, will you be prepared for tomorrow?
It is estimated that it can take approximately one to two years to recover a company’s reputation, brand and profits following a data breach.
According to the Ponemon Institute’s 2014 Cost of Data Breach Study, the average data breach event in the United States now costs $201 per lost or stolen record. Have you included in your budget this year the total number of current and former customers (and employees) that your business has — times the cost of $201? Would this cost force your organization to lay off employees or worse, go out of business?
The fact is if your business is not prepared for a data breach, your business can face significant fines, penalties, and reputational risks.
In addition and if you have not already done so, you need to assess the type of data loss (customer, employee or intellectual property) that will have the greatest impact on the reputation, brand and profits of your company.
The good news is that your business can mitigate the costs related to a data breach as the Ponemon Institute identified factors that lower the cost of a data breach event. The primary factor is if your business has a “data breach response plan” in place at the time of a breach event, and if so, Ponemon found an average cost savings that was $42 less than the national average of $201 per compromised record.
In two other recent data breach studies, the National Consumer League’s Data Insecurity Report, conducted by Javelin Strategy and Research, found that consumers are blaming retailers for the compromise of their credit card information and are responding by changing the stores they patronize.
Specifically, consumers will avoid doing business with the organization they blame for their stolen personal and financial information. This link between data breaches and fraud in the minds of consumers and changes in customer behavior should be a wakeup call for all businesses.
Nearly 60 percent of consumers who were fraud victims said their trust in retailers significantly decreased after their data was compromised. Also, 14 percent of consumers said they avoid certain merchants because of the potential for fraud, and only 10 percent of consumers said they believe retailers can keep their data safe.
In another recent data breach study titled “Security Matters: Americans on EMV Chip Cards” sponsored by NXP, it was reported that 64 percent of Americans are more likely to pay in cash after hearing about security breaches at large retailers.
Based on the above, every business and organization needs to prepare for a data breach. Too many companies believe it will not happen to them, and if it does, they believe they can handle it. With social media, the risk of any data breach is amplified. Just ask Target.
Mark’s most important: Businesses need to understand the reality that a data breach is inevitable. Your business profits, brand, and reputation depend on your business data breach response plan.
Mark Pribish is vice president and ID-theft practice leader at Merchants Information Solutions Inc., a national ID-theft and background-screening provider based in Phoenix. Reach him at firstname.lastname@example.org.
This article was originally published on AZcentral.com and republished with the author’s permission.