Results of the 2007 Annual Study: Cost of a Data Breach released this week concluded the total average cost of a data breach grew to $198 per compromised record, up from $182 in 2006 — an increase of 9 percent.

According to the study conducted by the Ponemon Institute, an independent privacy and information management research firm, lost business continues to dominate the cost of a data breach growing more than 30 percent since 2006 to $128 per record. Greater customer turnover and higher costs of new customer acquisition, due to increased marketing to recover lost customer business, now accounts for 65% of data breach costs. It demonstrates that consumers are fed up with companies that fail to secure their personal information and have no problem taking their business elsewhere. It also shows they have not become desensitized by the frequent reporting of data breach incidents like many companies have.

COSTS BY COST CENTER ON A PER RECORD BASIS

It is obvious that the cost of prevention far outweighs the cost of a breach. Companies should be very cautious about protecting entrusted personal data. The Ponemon study helps companies obtain guidance to support ongoing risk avoidance measures taken. Results from the survey indicate that a security breach can cost between $70 (not including lost business) and $198 per record. A company could calculate that if 1,000 records were compromised, it could cost between $70,000 and $198,000. By using this as a guide, you can estimate your company's potential cost of a breach.