It’s no secret that some retailers – and their shoppers – had a not so happy holiday season. Several big name retailers (and even a few restaurants in uTest’s backyard, the Boston area) suffered data breaches, leaving millions of customers with compromised information. Exactly how much these companies have suffered because of the security debacle remains to be seen, but the projected price tag isn’t pretty.
MarketPlace did a story on data breaches and came across a startling number. According to Larry Ponemon, Chairman of Ponemon Institute, Target’s data breach could cost the company “around $760 million.”
You know that poor security could cost you, but did you have any idea that it could be to the tune of hundreds of millions of dollars? Even smaller companies with fewer customers will feel the sharp consequences of a data breach.
[Ponemon] says his studies have shown that PR is hugely important in a data breach and the worse its handled, the more customers a company is likely to lose. “It’s called churn: How many people will stop being your customer as a result of data loss or theft? It can be more than half of the total cost of a data breach.” …
But waiting for all the facts can trigger costs of its own, like lawsuits and fines says Ted Julian, Chief Marketing Officer with CO3 Systems, which helps companies manage data breaches. “There are substantial privacy breach disclosure requirements,” he says. “Failure to meet those can trigger fines which can add up quite substantially.” Julian says there are strict state and federal rules about how soon you have to report a data breach and companies have to get smart about it quickly. All companies.
Between major financial loses, potential fines and lawsuits and losing enough customers to account for half the total cost, a data breach could be catastrophic for any company. These major retailers likely perform some degree of security testing, but let these stories serve as a reminder that your business – and all the apps, data and software that goes with it – doesn’t live in a sterile environment behind a firewall. It lives in the real world where people looking to do harm can find a chink in your security armor big enough to damage any company. Security testing with an expert who can think like a hacker should be part of your regular business maintenance – it could save you millions in the long run.