Data breach – Stellar Phoenix Solutions

One data loss incident can result in continuous cost. After making affected customers whole, conducting an internal investigation, repairing any damage to internal systems, and dealing with expected litigation, you can count on external audits, increased regulatory oversight, and a damaged reputation to stay with you for a while.

Without question, a data loss is not a one-time cost. Even after your operations have recovered, effects of the data loss could continue to impact your business for a decade or longer. One mistake can have far-reaching consequences, and a serious loss may mean that your business never recovers—or at least never returns to “normal.”

The cost of the data loss incident is determined by the size and nature of the organization, the sensitivity of the data that was lost, and the size of the incident itself. The cost of data loss can vary, especially as the far-reaching effects can be difficult to gauge. Forrester Research estimates that the average data leak results in $1.5 million in economic damage, while The Ponemon Institute pegs the amount at $4.8 million.

Data loss prevention provides a sound cost-avoidance strategy and can positively impact revenue—saving hundreds of millions of dollars with little upfront investment. The risk of damage extends beyond your company, ultimately affecting customers, business partners, and other stakeholders that can affect your business for many years.

The direct costs of intellectual property loss typically include:

Fees for legal recourse to address who leaked the data and discover if it was being used inappropriately
Short-term impact to R&D cost recuperation
- Key variable(s): assets stage in its lifecycle
Long-term impact to profitability/revenue projections
- Key variable(s): assets stage in its lifecycle, reproducibility, market demand
System and process audits to identify and correct the source of the data loss.

After a data loss event, organizations may face two costly professional service engagements: Periodic audits and process redesign.

A simple data loss that results in the loss of 100,000 customer records can turn into a direct and immediate cost of $21.8 million. To put this number in perspective, an employee who generates $1,000 in revenue per hour would have to work for 21,800 hours—a total of 109 years—in order to compensate for the loss.(See Figures)

Thus, the direct cost of a 100,000-record leak could amount to a minimum of $35.8 million over five years, averaging $7.2 million per year (See Figures).

The cost-per-record estimates from Forrester and Ponemon only address certain direct, indirect, and opportunity costs associated with the loss of customers affected by the leak. In high-profile cases, a company can expect to lose even more, as unaffected customers no longer find their business credible. Forrester estimates that a company can expect to lose up to 20 percent of their customer base because of a data loss.

Disasters that threaten a business can happen anywhere at any time. But no matter how it is caused, a loss of data, or access to data for any kind of extended period, inevitably means a loss of revenue, a loss of productivity, a loss of reputation, and increased costs.

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