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Cyber Crime: What It Costs You and How You Can Help Prevent It


High-profile data breaches like Sony, CitiGroup, WellPoint, AmeriHealth, Veteran’s Administration, CIA, UCLA, and TJ Maxx make headline news. But any company or entity that collects and stores data can be the target of cyber crime. In fact, according to a 2011 report from Verizon, of the more than 760 data breaches analyzed in 2010, nearly two-thirds involved businesses with fewer than 100 employees. What’s more, most data breaches are caused by simple negligence or a disgruntled employee who steals the data.

What does this all cost? According to a recent survey by the Ponemon Institute, which conducts research on privacy, data protection and information security policy, the latest estimates for the average cost per record is at $214.00 per identity. That can really add up and cost a company a lot of money.

What makes up this cost? There are a number of issues that come into play. When a breach is first discovered, a firm has to spend money on legal fees and IT forensics to determine which records were stolen and what data was compromised. Then you have notification costs to the customers. In notifying the customers, you usually also provide a free crediting monitoring service. In addition, you have crisis-management fees to let your customers (or the public) know what happened and to reassure them. Once the initial response is done, you have additional costs. This can include a class-action suit, increased regulatory scrutiny with fines and penalties, and loss of revenue.

 

How can you mitigate your risks? First, look within your organization and understand its exposure. Are you collecting information and not really doing much with it? What information are you storing, and how long are you keeping this data? Then look at how you’re protecting the data – the firewalls and data encryptions in place. Are you keeping track of laptops being taken from the company premises by employees who work at home? Are the laptops encrypted?

 

Then put a risk management program in place that is in line with your exposure. This includes training your employees about proper handling and protection of sensitive data. Digital records must be password protected and physical records should be locked in secure locations. Put in place a security-awareness training program. Don’t collect information you don’t need, and try to reduce the number of places where you retain business information. Don’t give unnecessary privileges to employees, especially regarding sensitive data. Safeguard your system against hackers, and use automatic prevention tools for database activity, bad configuration, and weak passwords. This can add an additional layer of security to your place.

At Axis Insurance Services, our cyber security insurance specialists can work with you to reduce your upfront exposure, develop effective new processes and procedures to minimize your risks, and help protect you against financial loss with Cyber Risk insurance.

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Blogged on: October 19, 2011 by Mike Smith
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