The average cost of a data breach is $204 per lost record, with more than half of such costs attributable to lost customers and the associated public relations expenses to rebuild an organization’s reputation. The below examples illustrate situations in which the costs incurred to re-mediate a data breach were significant. I site these examples from Philadelphia Insurance Company marketing materials.
An Intl. computer hacking group gained access electronically to the computerized cash registers of a restaurant chain and stole credit card information of 5,000 customers, starting a flood of fraudulent purchases around the world.
Theft of Digital Assets
A regional retailer contracted with a third party service provider. A burglar stole two laptops of the service provider containing the data of over 800,000 clients of the retailer. Under applicable notification laws, the retailer – not the service provider – was required to notify affected individuals. Total expenses incurred for notification, and crisis management to customers was nearly $5,000,000.
Theft of Digital Assets
A home health-care organization had backup tapes, laptops and disks containing social security, numbers, clinical and demographic information and in a small number of cases, patient financial data that was stolen. In total, over 365,000 patient records were exposed. The organization settled with the state attorney general, providing patients with free credit monitoring, credit restoration to patients that were victims of identity fraud, and reimbursement to patients for direct losses required to revamp its security policies, implement technical safeguards and conduct random compliance audits.
A non-profit community action corporation printed two 1099 forms on one piece of paper. An employee was supposed to separate the forms and send each to its rightful owner. Instead, one person received both copies. The mistake sent tax forms and social security numbers to strangers. Approximately, 50% of the landlords who work with the community action corporation received their form in addition to the private information of the others.
Cyber Extortion Threat
A U. S. Based information technology company contracted with an overseas software vendor. The contracted vendor left universal ‘administrator’ defaults installed on the company’s server and a “Hacker for Hire” was paid $20,000 to exploit such vulnerability. The hacker advised if the requested payment was not made he would post the records of millions of registered users on a blog available for all to see. The extortion expenses and extortion monies re expected to exceed $2,000,000.
An employee of a private high school mistakenly distributed via e-mail the names, social security numbers, birth-dates and medical information of students and faculty creating a privacy breach. Overall, 1,250 individuals’ information was compromised.
A juvenile released a computer worm directing infected computers to launch a denial of service attack against a regional computer consulting & application outsourcing firm. The infection caused an 18 hour shutdown of the entity’s computer systems. The computer consulting & application outsourcing firm incurred extensive costs and expenses to repair and restore their system as well as business interruption expenses which totaled approximately $875,000
Thanks to Philadelphia Insurance Companies for these claims examples. A member of the Tokio Marine Group. Coverages described may not be available in all states and are subject to underwriting. Philadelphia Insurance Companies is one of our preferred markets for Cyber Coverage. If we can review your needs please let us know what your situation is and we will be happy to engage with your needs.