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System failure blamed for increasing data breach costs

Negligence drops to number 2...

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System failure has replaced negligence as the single biggest source of data breaches involving UK firms, the cost of which rose for the third successive year.

The average data breach cost UK organisations £1.9 million or £71 per record, an increase of 13 per cent from the year before, according to a Symantec-sponsored survey. Cost of breaches ranged from £36,000 to £6.2 million.

The 2010 edition of the survey blamed "malicious or criminal attacks" for 29 per cent of all data breaches, up from 22 per cent during 2009. The costs arising from data breaches include cleanup costs as well as increased customer churn due to diminished trust.

More than a third (37 per cent) of the cases scrutinised during the study involved system failure, up 7 percentage points on 2009. Negligence, by contrast, dropped 11 points to reach a 34 per cent blame for data breach rating last year. Lost or stolen devices and third-party mistakes each fell slightly, while malicious or criminal attacks rose five points to become the principle reason given for 29 per cent of data breach incidents.

The survey, published today, and carried out by the Ponemon Institute under the sponsorship of Symantec, was based on an analysis of actual data breach experiences of 38 UK companies from 13 different industry sectors, including banks and telecoms.

Seven in 10 firms hit by data breach problems applied encryption technologies as a post-breach remedy, while moves to strengthen perimeter controls were applied by a similar number (69 per cent) of victims.

Last year the Information Commissioner's Office (ICO) received new enforcement powers, including the ability to levy heavy fines on organisations that experience data breaches as a result of negligence, providing even more reason to prevent breaches in the first place.

"Regulators are cracking down to ensure organisations implement required data security controls or face harsher penalties," said Dr Larry Ponemon, chairman and founder of the Ponemon Institute. "Confronted with both malicious and non-malicious threats from inside and outside the organisation, companies must proactively implement policies and technologies to mitigate the risk of costly breaches." ®

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