Its negative connotation is deserved. For insurance companies, a data breach spells instant trouble-the least of which is potential loss of reputation, brand and revenue. If a court of law rules the insurance company is negligent, a data breach has the potential of ultimately shutting the carrier's doors.Recent research by the Chief Marketing Officer Council, Palo Alto, Calif., revealed that a company loses, on average, from 0.63% to 2.10% value in stock price when a breach is reported-equivalent to a loss in market capitalization of $860 million to $1.65 billion per incident.
The perils associated with data breaches are profound, as are the number of recorded insurance industry events (see "Chronology of Data Breaches," below.) Yet nearly two-thirds of security executives queried in a recent research study reported that their organizations lack the accountability and resources necessary to enforce data security policy compliance. Of the 853 U.S.-based information security professionals (nearly 20% from insurance and financial services firms) surveyed in the "National Survey on Detection and Prevention of Data Breaches" study, 59% believe they can effectively detect a data breach, but 63% believe they cannot prevent a data breach.
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