Rise In Data Breach Hits Customer Loyalty
Data breaches are on the rise, hitting customer loyalty, as they do not want to shop or do business again with a company that had experienced a data breach. More than 175 million records were compromised between April and June due to 237 data breaches, bringing the 2014 total to 375 million records affected and 559 data breaches. These numbers are from SafeNet’s Breach Level Index second quarter report.
The report found that while data breaches cross barriers such as geography, industry vertical and organization size, retail was the hardest hit industry, with more than 145 million records stolen, or 83 percent of all data records breached, followed by government, financial services and healthcare.
Another important finding in the report is that less than 1 percent of all of the data breaches in the second quarter happened to networks that used encryption or strong security platforms to protect the data. While every security system cannot be foolproof, there are chances of avoiding a breach by putting a strong security practices in place, says the report. At the same time, it is worrisome to think how many businesses are still lacking when it comes to network security. A sound security approach is vital to any company’s success, says SafeNet adding that once a customer discovers a company has been breached, he or she is not likely returning to the site
For example, the global survey of more than 4,500 adult consumers shows nearly 40 percent of respondents said they would never, or were very unlikely to, shop or do business again with a company that had experienced a data breach. This sentiment increased to 65 percent if the data breach involved customers’ financial and sensitive information.
Other highlights from the report include:
- In each of the last four consecutive quarters, there has been one major data breach in which more than 100 million records were exposed.
- 175,655,228 records were stolen in the second quarter. This equates to 1,951,724 records stolen per day; 81,321 stolen per hour; and 1,355 records stolen every second.
- Malicious outsiders are targeting businesses’ most critical records. They are responsible for compromising 99 percent of the records and 56 percent of the incidents this quarter, more than any other source.
- Identity theft was the leading cause of breaches with 58 percent of all incidents and 88 percent of records stolen.
- Encryption was used in only 10 of the 237 reported data breach incidents. Of those, only two could be classified as secure breaches in which encryption restricted the access of stolen data.
- The US. accounted for 85 percent of records compromised worldwide and 74 percent of all reported incidents, more than any other country. Germany followed with 10 percent of all records stolen. Three of the top five breaches were based in the US., with the other two breaches occurring in Europe.
- Government was the second least secure sector after retail, accounting for 11 percent of all records that were lost or stolen. Healthcare incurred 23 percent of incidents, more than any other industry, but only accounted for 782,732 records lost or less than 1 percent of all records stolen during the quarter. Financial services breaches decreased significantly from the first quarter, down from 56 percent to less than one percent of records stolen in the second quarter.
“Even amidst continued warnings about data security, the breach epidemic is trending in the wrong direction. This has proven to be more of the same, with 375 million customer records stolen in the first six months alone,” said Tsion Gonen, chief strategy officer, SafeNet.
Gonen says while it is not surprising that sophisticated cybercriminals are gaining access to critical data stores, what is surprising is that only one percent of breached records had been encrypted. The benefits of encryption have been known for some time, but companies just aren’t doing it. “Everyone knows it’s good for you and the technology is proven, but only a small percentage of companies do it well,” he says.
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