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<b>Online Exclusive:</b> Cost of Privacy Breaches Rises in 2006

By ALM Staff | Law Journal Newsletters |
October 24, 2006

Analysis of 31 major corporate privacy breaches this year finds that the average cost to a company has surged to $182 per compromised record, an increase of 31% over 2005. The study was conducted by the Ponemon Institute on behalf of PGP Corporation and Vontu, Inc., two privacy technology firms.

The study takes a comprehensive look at the financial consequences of data breaches involving consumers' personally identifiable information, including legal, investigative, and administrative expenses, stock performance, customer defections, opportunity loss, reputation management, and costs associated with customer support such as information hotlines and credit monitoring subscriptions.

'The burdens companies must bear as a result of a data breach are significant, making a strong case for more strategic investments in preventative measures such as encryption and data loss prevention,' said Dr. Larry Ponemon, chairman and founder of The Ponemon Institute.

Andrew Krcik, vice president of marketing for PGP Corp., added that 72% of respondents indicated that 'ineffective protection of electronic information' was the primary cause of their breach.

Analysis of 31 major corporate privacy breaches this year finds that the average cost to a company has surged to $182 per compromised record, an increase of 31% over 2005. The study was conducted by the Ponemon Institute on behalf of PGP Corporation and Vontu, Inc., two privacy technology firms.

The study takes a comprehensive look at the financial consequences of data breaches involving consumers' personally identifiable information, including legal, investigative, and administrative expenses, stock performance, customer defections, opportunity loss, reputation management, and costs associated with customer support such as information hotlines and credit monitoring subscriptions.

'The burdens companies must bear as a result of a data breach are significant, making a strong case for more strategic investments in preventative measures such as encryption and data loss prevention,' said Dr. Larry Ponemon, chairman and founder of The Ponemon Institute.

Andrew Krcik, vice president of marketing for PGP Corp., added that 72% of respondents indicated that 'ineffective protection of electronic information' was the primary cause of their breach.
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