Scariest Financial Services Risk: Data Breach

The Scream, by Edvard Munch (1893)

The Scream, by Edvard Munch (1893)
Nothing strikes fear in the hearts of financial managers like the phrase “data breach.” Banks, asset managers, insurance companies and the like, all handle volumes of private financial data.

Chart: Cost of a Data Breach

We are bombarded every day with the news of computer hackers and viruses, but breaches can just as easily happen from lost files or mishandled waste. Perhaps, most terrifying is that the cost of a breach keeps increasing.

When the cost of regulatory fines, call centers and loss productivity are added in the cost can be, well, frightening. But for a truly horrifying experience, multiply the number of your institution’s customers by $200. This will give you some sense of what’s at stake with your network security. Scared yet? Each state (and privacy laws vary widely from state to state) requires remedial steps taken when a breach occurs. Estimates by the Ponemon Institute now suggest that, on average, a data breach winds up costing a financial institution over $200 per individual affected by the breach. In addition to simple notification, most compliance policies require credit monitoring and other steps be taken.

This post was part of the special feature about Our Scariest Risks, published October 31, 2011. The feature also included these other risks:
Captive Insurance
Employee Benefits
Environmental Liability
Financial Services
Health Care
Middle East
Real Estate
Supply Chain
Trade Credit

About Richard Magrann-Wells

Richard is a Executive Vice President with Willis Towers Watson’s Financial Institutions Group based in Los Angel…
Categories: Cyber Risk, Financial Services | Tags:

Leave a Reply

Your email address will not be published. Required fields are marked *