Wall Street & Technology is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.


11:26 AM
Becca Lipman
Becca Lipman
Connect Directly

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
1 of 4
More Commentary
A Wild Ride Comes to an End
Covering the financial services technology space for the past 15 years has been a thrilling ride with many ups as downs.
The End of an Era: Farewell to an Icon
After more than two decades of writing for Wall Street & Technology, I am leaving the media brand. It's time to reflect on our mutual history and the road ahead.
Beyond Bitcoin: Why Counterparty Has Won Support From Overstock's Chairman
The combined excitement over the currency and the Blockchain has kept the market capitalization above $4 billion for more than a year. This has attracted both imitators and innovators.
Asset Managers Set Sights on Defragmenting Back-Office Data
Defragmenting back-office data and technology will be a top focus for asset managers in 2015.
4 Mobile Security Predictions for 2015
As we look ahead, mobility is the perfect breeding ground for attacks in 2015.
Register for Wall Street & Technology Newsletters