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Becca Lipman
Becca Lipman
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4 Surprising Ways Firms Think About Data Security Costs

Almost 28% of firms are willing to bear the cost of some financial losses due to cybercrime, because it's less than the cost of upgrading IT systems.

According to the recent Kaspersky Lab survey of worldwide IT professionals, 93% of financial services organizations experienced cyberthreats in the past year. With the number and sophistication of cyber attacks on the rise, it's fair to say the remaining 7% are probably lying, or completely oblivious to what's going on in their systems.

The survey asked 3,900 participants across 27 countries about the obstacles they faced in managing and maintaining their IT infrastructure and in allocating resources to various issues like security and training.

"Protecting highly sensitive data," "preventing IT security breaches," and "data protection" stuck out as the top concerns of IT leaders. As the survey dove deeper into practices and priorities, it became clear that for reasons largely having to do with cost, organizations are not as eager to increase efforts in security.

Bearing the costs
Ross Hogan, global head of the fraud prevention division at Kaspersky Lab says the most worrisome finding from the survey was that the percentage of large businesses and enterprises “willing to bear the cost of some financial losses due to cybercrime because it will still be less than the cost of upgrading our IT systems” is staggering.

According to the survey announcement, this attitude is "particularly flawed," given that 52% of financial institutions have a reimbursement policy for all losses caused by cybercrime without investigation. For a large firm, this can run into the hundreds of thousands of dollars.

He says if these organizations considered the “total cost of fraud,” which includes not only financial losses, but operational costs, legal and regulatory impact, reputation damage, customer attrition, the increased cost of acquiring new customers, and the overall emotional toll and loss of morale, they would certainly think and act differently.

When asked if existing measures for protecting financial transactions were sufficient, 53% were comfortable with their current strategy, 45% felt they should be doing more, and a pragmatic 27% had felt they found that balance between their risk and costs.

Hogan understands incremental investment in security in an effort to outpace the savviest of hackers can be daunting. "Instead, I would recommend organizations partner with expert global security organizations that develop flexible technologies capable of adapting to the latest threat evolution."

 

Becca Lipman is Senior Editor for Wall Street & Technology. She writes in-depth news articles with a focus on big data and compliance in the capital markets. She regularly meets with information technology leaders and innovators and writes about cloud computing, datacenters, ... View Full Bio
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Greg MacSweeney
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Greg MacSweeney,
User Rank: Author
10/1/2014 | 12:04:39 PM
Re: By inaction, they are funding cybercrime
Ha, yes. well put. Hacking the hackers might make you feel good, but that good feeling will only last until you are hacked again.
Some Guy
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Some Guy,
User Rank: Apprentice
9/30/2014 | 9:15:06 PM
Re: By inaction, they are funding cybercrime
Hacking the hackers would be like the Pinkertons robbing Butch Cassidy and the Sundance kid after the Hole in the Wall gang held up a train. That's an answer, but doesn't have the same effect of preventing other gangs from considering the crime as the solution they applied.

[With a send-out to one of my favorite Kevin Bacon movies ...] Like my Uncle Olaf used to say: "Never wrestle with a pig in the mud. You are only going to get dirty, and run the risk of teaching him to like it."

 
Becca L
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Becca L,
User Rank: Author
9/30/2014 | 7:31:41 PM
Re: By inaction, they are funding cybercrime
Some Guy, I agree, it is rather crazy how hands off retailers are about taking out the criminals, but a lot of that is due to legal limitations. I just wrote a piece on hacking the hackers that you might find interesting (or engraging). http://www.wallstreetandtech.com/security/hacking-the-hackers-the-legal-risks-of-taking-matters-into-private-hands/a/d-id/1315980
Becca L
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Becca L,
User Rank: Author
9/30/2014 | 7:29:15 PM
Re: Taking Chances
I've seen a lot of smaller shops using Square payment services. I'm not sure how their security stands up to the rest of the payment services, but i assume they choose it because the service separates the retailer from reimbursment of card fraud.
Becca L
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Becca L,
User Rank: Author
9/30/2014 | 7:26:20 PM
Re: Taking Chances
Good plan, I'm all in exept when they have credit card minimums, which I cannot stand, even if they deny me my credit card swipe with a smile.
IvySchmerken
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IvySchmerken,
User Rank: Author
9/15/2014 | 10:51:25 AM
Re: Taking Chances
That is a good point. Local mom and pop stores tend not to be targeted by the cyber criminals. However, I don't think this is going to replace the need to shop at the big box stores. How about Bitcoin? Isn't that supposed to be a more secure form of payment?
Byurcan
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Byurcan,
User Rank: Author
9/15/2014 | 9:31:27 AM
Re: Taking Chances
I think we should all start patronizing our local, main street small businesses, which won't be targeted like big box stores will. And are friendlier.
IvySchmerken
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IvySchmerken,
User Rank: Author
9/12/2014 | 8:25:53 AM
Re: Taking Chances
Customers are becoming numb to the news of yet another breach at a favorite store. I need to go to Home Depot this weekend. I thought of that first and then remembered, what about the recent credit card breach? I reasoned, that was in the past. I'm not going to boycot the store. As for stores relying on credit card cmpanies to cover their losses, I'm wondering if that lifeline is going to run out soon.
IvySchmerken
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IvySchmerken,
User Rank: Author
9/12/2014 | 8:22:16 AM
Re: Taking Chances
Well said, Nate. Retailers and banks should be spending money to protect their customer's data from security breaches and not relying on reimbursements from credit card companies. This trend is now benefiting Bitcoin - which is viewed by some as a more secure alternative to cash and credit cards - so I've read.
Nathan Golia
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Nathan Golia,
User Rank: Author
9/11/2014 | 1:55:20 PM
Re: Taking Chances
There's no real reason they shouldn't. This survey shows a somewhat hands-off approach to fighting cybercrime generally speaking. Right now the only real way to protect yourself is to use cash and shop as at few places as possible. But that's not really a priority for customers either.
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