The Price Tag of Losing Data: Infographic


That data breaches can have significant impact on the organization experiencing it is a fact well understood by both the management and CIO team. If nothing else, the Target breach has at least taught businesses that none will be spared, not even the CEO.

 

But, beyond the CIO/CEO resignations, loss of brand reputation and break of customer trust there is a whole lot of economics at play, understanding which gives a fuller and clearer picture of the enormity. A single breach incident can spiral off a series of costs on various ends like a chain reaction.

 

According to a report published in The Washington Post in February 2014, titled'Data breach hits Target's profits, but that's only the tip of the iceberg', just about two months into the breach Target had already spent $61 mn on breach related costs, including legal fees, damage control, credit monitoring services, customer reimbursements and software updates. Only a part of this will be covered by insurance, leaving out the rest of the bill to be footed by the company. And, not to mention the ensuing revenues losses and nose diving sales with 40% fall in profits post the incident, equal to paying up $ 443 mn.

 

Till date, almost a year into the incident, the total damage calculations would be much higher and still counting. And, there's no saying at what figure it will finally stop. The final tally will depend on multiple factors, like the outcome of the government probe into whether the retailer was at fault of non-compliance to industry-specific security standards or not, plus the hundreds of lawsuits it is currently facing for inability to adequately protect customer data, with more likely to get added in the future.


If one were to go by the infographic depiction, showcasing how expensive the fallout can be, there is no doubting some grave repercussions. Besides the $ 443 mn fall in profits the retailer also had to shell out $ 15.9 mn in severance for the resigning CEO. Further, the company is facing possibly upto $1.1 bn in fines if non-compliance to industry standards is proven and another $ 2.2 bn in possible fraudulent charges on stolen cards.

 

So far, these are the damages costing a single business entity, Target. What about the other parties involved in the ecosystem. For instance, the banks would need to issue new cards to the customers and foot that bill in whole or part, depending on their respective agreements with Target.

 

Even more interesting is how it affects the end consumers, as depicted by the infographic. They not only end up with their personal data compromised for misuse but also land up footing the bill of all those above mentioned damages incurred by the primary business entity that was hacked, i.e. the retailers as well as the cards providers.

 

The infographic puts across very succinctly how the damages costing the retailers and card providers worth millions and billions of dollars, discreetly find their way to the end consumer. This, in turn, spirals yet another vicious chain of customer dissatisfaction, ultimately hitting revenues.

 

But, instead of sparking a debate around who ultimately incurs more damages and foots the maximum bill - the retailer or the customers - let's just suffice it to say that both end up on the losing side. The only winner here is the hacker.

 

Infographic Source: How Consumers Foot the Bill for Data Breaches, byAuthentify.com   

Categories: Management

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