Global Cost of Data Breach Increases by 15% in 2014
Ponemon Institute, LLC released its ninth annual Cost of Data
Breach Study: Global Study, sponsored by IBM Corp.
According to the study of 314 companies
spanning 10 countries, the average total cost of a data breach increased 15% in
the last year to $3.5 million
local currencies were converted to U.S. dollars for comparison purposes.
The study also found that the
cost incurred for each lost or stolen record containing sensitive and
confidential information increased more than 9% to $145.
The study involved the collection of detailed information
about the financial consequences of a data breach. For purposes of this
research, a data breach occurs when sensitive, protected or confidential data is
lost or stolen and put at risk.
Ponemon Institute conducted 1,690 interviews with IT,
compliance and information security practitioners representing 314 organizations
in the following 10 countries: USA, UK, Germany, Australia, France, Brazil,
Japan, Italy, India and, for the first time, the Arabian region (a consolidation
of organizations in the United Arab Emirates and Saudi Arabia).
"The goal of this research is to
not just help companies understand the types of data breaches that could impact
their business, but also the potential costs and how best to allocate resources
to the prevention, detection and resolution of such an incident," said Dr. Larry
Ponemon, chairman and founder, Ponemon. "This year's Cost of Data Breach Study
also provides guidance on the likelihood an organization will have a data breach
and what can be done to reduce the financial consequences."
All those interviewed are knowledgeable about their
organization's data breach and the costs associated with resolving the breach.
All participating organizations experienced a data breach ranging from a low of
approximately 2,400 to slightly more than 100,000 compromised records, which
identifies the individual whose information has been lost or stolen in a data
"Clearly, cybersecurity threats are
a growing concern for businesses, especially when we consider how persistent
data has become in the age of cloud and mobility," said Kris Lovejoy, GM, IBM
security services division. "A data breach can result in enormous damage to a
business that goes way beyond the financials. At stake is customer loyalty and
The following are key
takeaways from Global Cost of Data Breach Study:
- The most costly breaches occurred in the U.S. and Germany
at $201 and $195 per compromised record, respectively. The least expensive
data breaches were in India and Brazil at $51 and $70, respectively.
- Root causes of data breaches differ among countries and
affect the cost of the breach. Countries in the Arabian region and Germany
had more data breaches caused by malicious or criminal attacks. India had
the most data breaches caused by a system glitch or business process
failure. Human error was most often the cause in the UK and Brazil. The most
costly data breaches were those caused by malicious and criminal attacks.
The U.S. and Germany paid the most at $246 and $215 per compromised record,
respectively. These types of data breaches were least costly for companies
in India and Brazil at $60 and $77 per compromised record, respectively.
- A strong security posture was critical to decreasing the
cost of data breach. On average, companies that self-reported they had a
strong security posture were able to reduce the cost by as much as $14 per
- The involvement of BC management reduced the cost of data
breach by an average of almost $9 per record.
- The appointment of a Chief Information Security Officer
(CISO) to lead the data breach incident response team reduced the cost of a
breach by more than $6.
- Countries that lost the most customers following a data
breach were France and Italy. Companies in the Arabian region and Brazil
experienced the lowest loss of customers.
- The probability of a company having a data breach
involving 10,000 or more confidential records is 22% over a two-year period.
Countries most likely to experience a data breach include India, Brazil and
Consistent with previous Cost of Data
Breach studies, the most common cause of a
data breach is a malicious insider or criminal attack.
In this year's study, companies represented in this research
were asked what worries them most about security incidents, what investments
they are making in security and the existence of a security strategy.
Following are some of the key findings:
- The greatest threats to the companies in this study are
malicious code and sustained probes. According to threats increased.
- Only 38% of companies have a security strategy to protect
its IT infrastructure. A higher percentage (45%) has a strategy to protect
their information assets.
- Malicious code and sustained probes have increased the
most. Companies estimate that they will be dealing with an average of 17
malicious codes each month and 12 sustained probes each month. Unauthorized
access incidents have mainly stayed the same and companies estimate they
will be dealing with an average of 10 such incidents each month.
- The majority of companies (50%) have low or no confidence
that they are making the right investments in people, process and
technologies to address potential and actual threats.
- Ideally companies would like to invest $14 million over
the next 12 months to execute their organization's security strategy.
However, in the next 12-month period, companies anticipate having an average
of about half that amount, or $7 million, to invest in their security