Massive data security breaches at retailers, such as The TJX Companies and more recently at the Hannaford supermarket chain, are a good case in point. In both instances, significant amounts of financial data were compromised by hackers, potentially exposing millions of consumers to credit card fraud. And in both cases, multiple lawsuits were filed shortly after the data intrusions became public.
Circumstances surrounding the Hannaford breach, which exposed up to 4.2 million card numbers, are still surfacing. Yet, more than a year after TJX disclosed the largest credit and debit card data breach in history, banks continue to file lawsuits claiming damages due to card reissuance costs, monitoring expenses or fraud loss. That's on top of millions of dollars in charges TJX has already taken against earnings, plus up to $40.9 million for breach-related losses that TJX agreed to pay Visa in a settlement reached last fall. TJX has spent or set aside about $250 million for costs related to the breach in the past year. But that doesn't include lost business or reputational costs.
According to the Ponemon Institute, data breaches cost companies an average of $197 per record in 2007, and the average cost of a data breach was $6.3 million, up from $4.8 million in 2006.
If responsibility for shoring up a company's defenses against data leaks falls into your camp, ask yourself, “Does this solution conform to best practices for encrypting payment data? More fundamentally, are we storing and safeguarding that data in the best possible way? Or does outsourcing to software-as-a-service professionals make more sense than doing it ourselves?” In an era of continually cheaper data storage options, it's easy not to think critically about how much data should be retained, where it makes the most sense to store that data, and how best to protect it – until it's too late.
By defining quality you'll help build a culture of security awareness and responsibility that extends from the executive suite to the receptionist and all points in between.