Though the news
that customers who shopped at Target
(NYSE:TGT) stores November 27th through December 15th may have had their debit and credit card data breached is troubling, the potential cost of the aftermath may be just as concerning to investors in both the retail giant and the financial institutions impacted. Here’s a look at how quickly the costs of a security breach like the one Target recently announced can escalate.
According to the benchmarking study, 2013 Cost of Data Breach
(sponsored by Symantec and conducted by the Ponemon Institute) the average cost of a data breach in the United States is $188 per record. Though the actual figure Target will absorb depends on a variety of direct and indirect expenses, including detection, escalation, and notification, the latest reports are that an estimated 40 million customer records have been potentially compromised. Back in 2007, when retailer TJX
(NYSE:TJX) suffered a breach of credit and debit card data that impacted more than 45 million customers, the total price tag rang in at a whopping $256 million.
Though Target has stated only that it is “partnering with a leading third-party forensics firm to conduct a thorough investigation of the incident,” the “why” behind a breach and a retailers’ reaction to it impacts costs as well. Though the benchmarking study indicated that malicious and criminal attacks prove the most costly across the globe and can increase the cost per breach to $277 in the United States, organizations that have a firm response plan and partnership with security consultants, which Target appears to have, are better equipped to manage the costs. The study also indicates that compared to healthcare and financial companies, who have robust, sensitive data at stake, retailers actually face the lowest costs in a breach like this.
As for the credit issuers impacted? In this case, Information Security Media Group
reports that MasterCard
(NYSE:MA) and Visa
(NYSE:V) both issued alerts related to the attack, which enable such institutions to spot potential fraud before significant costs are accrued. However merchant insurance provider Royal Group Services
places the average cost per record breached at a financial institution at $280.
Aside from those figures, however, there is the intangible potential loss that last-minute holiday shoppers who would otherwise shop at Target will spend elsewhere, trusting their data instead to its competitors in the midst of the uncertainty.
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.