According to a new study published by the Ponemon Institute the costs of data breaches continue to rise. In 2005 the cost per breached record was $138 and rose to $202 in 2008 for a nearly 46% increase in the cost per record. A more compelling statistic is that the ‘lost business’ component grew almost 38% over four years. This indicates that customers are getting inreasingly unhappy with businesses that experience data breaches and are showing their dissatisfaction by taking their business elsewhere. In fact 84% of surveyed consumers expressed increased concern or anxiety over lost data.

It should come as no surprise that companies that experience data breaches are hit hard both financially and reputationally. Many of the companies that I speak with express a greater concern over the reputational aspect than the financial aspect. I am reminded of a major franchise that had a single store found to have rats. The headline in the newspaper did not read “XYZ franchise #3 has rat problem” it read: “XYZ company has rats”. We see a similar situation in the payment card industry. If a franchisee experiences a data breach it is the parent company that is going to take the hit to their reputation.