It’s the start of a new year and many businesses look to kick off on the right foot whether that be through implementing new sales strategies or increasing their product offering, but have they given any thought to online risk management as a success strategy?
A majority of businesses now conduct a significant amount of their business online and recent studies conducted by the Ponemon Institute suggests that the cost of data breach is on the rise.
The Facts
Some of the key findings of the 2014 Cost of Data Breach Study:
- The cost per lost or stolen record has increased for the last 5 years consecutively. A record can be defined as any information that identifies and individual whose information has been compromised in a data breach. In 2013, the average cost of a data breach increased $4 from $141 to $145.
- The staggering average cost of a data breach for a company has increased from $2.72 million in 2013 to $2.80 million in 2014.
- Business losses, which refer to abnormal turnover of customers (a higher than average loss of customers), increased customer acquisition strategies, reputation losses and diminished goodwill have increased from $0.76 million in 2013 to $0.85 in 2014.
Who Is At Risk?
While it is widely known that all business face the possibility of a cyber attack, the study has found that some industries are more likely to be targeted by cyber criminals than others.
Topping the list are the retail and financial sectors, with a possible explanation being the sensitive nature of the data they tend to collect such as names, addresses and credit card details.
Interestingly, the financial sector is most vulnerable to higher abnormal churn rates, meaning more customers are likely to terminate their relationship with a company following a data breach. In turn, the cost of a data breach for companies more susceptible to churn rates is significantly higher than those less susceptible to higher churn rates.
Prepare, Prepare, Prepare
Given the findings of the 2014 Cost of Data Breach Study, it is apparent that all businesses should consider data breach as a real threat to the success of their operations, with the likelihood of an occurrence on the rise.
There are a number of ways in which businesses can protect themselves against a data breach. As a part of the overall risk management strategy, businesses are encouraged to conduct a number of assessments to identify the vulnerabilities in their current security strategy, and the possible impact they may have.
Many businesses now engage third party security firms to conduct an audit of their cyber security measures through carrying out ‘ethical hacking’ to highlight weaknesses in their systems and recommend possible remedies to safeguard their data.
Investing time and resources into the online security of your business could be the difference between losing or retaining your valuable customer database.
For further information about how you can safeguard your business against cyber threats, refer to our Ultimate Cyber Insurance Guide for Businesses.
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