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Cyber Insurance Helps Target Cover Some of Its Breach-related Costs

On Jan. 10, Target announced it would offer one year of free credit monitoring, identity theft protection and zero liability for the cost of fraudulent charges to all its customers. Offering this is a smart move on Target’s part to protect its credibility and to maintain good customer relationships. But offering all of this isn’t cheap.

According to the Ponemon Institute’s 2013 Cost of a Data Breach study, the average cost of a breached record is $188, which includes both direct and indirect expenses incurred by the organization. Even just the indirect expense of communication—sending customers notification of the incident and setting up a call center for customer inquiries—can cost a lot.

Target has at least $100 million of cyber insurance coverage. If you multiply the number of customers affected by the breach by the average cost of a breached record, the total cost of this massive breach exceeds the limits of its policy. But the insurance will help cover a big chunk of the customer notification and credit monitoring costs, as well as expenses related to hiring a computer forensics investigator, fines and more.

If a data breach happens to your company, how would you pay for the damages? Contact Warren G. Bender Co. to learn more about cyber insurance.

Filed under: Classic — Manager @ 12:27 am February 20, 2014