Average Cost of Data Breach Rises to $3.8 Million

By Paul Ausick Updated Apr 27, 5:11PM EDT · Published May 29, 1:55PM EDT

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Based on a study of 350 companies in 11 countries, the average data breach costs a company an average of $3.79 million, or $154 for every lost or stolen record. The amounts represent an increase from the overall average cost of $3.52 million in 2014 and a per-record cost of $145.

Massive data breaches such as the estimated 56 million credit and debit card numbers stolen from Home Depot Inc. (NYSE: HD) in 2014 and the 40 million exposed by the Target Corp. (NYSE: TGT) in the attack against the company during the 2013 holiday shopping season cost the companies far more than that average. One estimate of the cost to Home Depot came in at $10 billion by 2020 (an average of $177 per lost record).

Over the next 24 months, companies and organizations in Brazil and France are the most likely to experience a data breach involving a minimum of 10,000 records, while organizations in Canada and Germany are the least likely to have such a breach. The somewhat good news is that any company is more likely to have a breach involving 10,000 or fewer records (22% chance) than a breach involving more than 100,000 records (less than 1% chance).

The data was released earlier this week by International Business Machines Corp. (NYSE: IBM) and the Ponemon Institute, a data security consulting and research firm. All 350 companies included in the study have experienced a data breach at some time, with the breaches ranging from a low of about 2,200 comprised records to a high of more than 101,000 breached records.

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The research notes three major reasons for the higher costs in 2015:

Cyberattacks occur more frequently and the cost to repair the damage is higher.
The cost of the lost business is higher while repairs are being made.
Costs to detect breaches are higher.

In the United States, the cost of a data breach averages $6.5 million, the highest in the world, followed by Germany which has an average total cost of $4.9 million. The lowest costs are posted in Brazil ($1.8 million) and India ($1.5 million).

The cost of a data breach to a health care organization could be as much as $363 per record. From 2014 to 2015, the retail industry has seen its costs for a data breach rise from $105 to $165 per lost or stolen record.

Data breaches are most often the result of malicious or criminal attacks (47% of the time), with system glitches accounting for 29% of data breaches and human error accounting for the remaining 25%. More than half of all breaches are the result of a system glitch or human error in all but three locations: Canada, Germany and the combined Saudi Arabia-United Arab Emirates region. In the United States, malicious or criminal attacks account for 49% of data breaches.

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About the Author Paul Ausick →

Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.

He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.