Data breaches are costing companies more than ever, according to a recent study—and smaller companies may be most at risk.
Data losses, which can result from theft or carelessness, are a downside of the information age. According to the Identity Theft Resource Center (ITRC), more than 35 million data records were breached in 2008 in the United States—47 percent more than in 2007.
How much do data losses cost? The Ponemon Institute, which studies business privacy practices, surveyed 43 U.S. companies across 17 industry sectors that lost data in 2008. According to the study, data losses ranged from 4,200 records to 113,000 records, and each data record lost cost $202—making the total cost between $848,400 and $22,826,000.
That number was up from $197 per data record lost in 2007, $182 in 2006, and $138 in 2005, the first year the study was conducted.
Why are data losses so costly? When you lose data, a number of costs are incurred, including detecting data losses, notifying victims, paying for victim reparations (such as free credit checks), and hiring experts to remedy the problem. You also must account for business lost as a result of customer mistrust. In fact, in the Ponemon study, $139 of the lost $202 per data record represented the cost of lost business.
Small companies may suffer the most from data losses. Another study conducted earlier this year by StollzNow Research asked IT managers from 945 companies about their experiences related to data management. They found that an alarming 49 percent of small companies fail to back up their data on a daily basis.
This is despite the fact that nearly half of all participants experienced data loss in their workplace in the past two years, and 36 percent felt that data loss could have a significant impact on their business.
Don’t put yourself at risk. We can help you prevent costly data loss by implementing a policy for the preservation of data, and by installing and testing backup systems on a regular basis.
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Study: Data Losses Proving More Costly for Businesses