Healthcare Data Privacy

HHS Secretary Alex Azar Promises Reforms to Federal Health Privacy Rules

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At a July 27 address at The Heritage Foundation, Secretary of the Department of Health and Human Services (HHS), Alex Azar, explained that the HHS will be undertaking several updates to health privacy regulations over the coming months, including updates to the Health Insurance Portability and Accountability Act (HIPAA) and 45 CFR Part 2 (Part 2) regulations.

The process is expected to commence in the next couple of months. Requests for information on HIPAA and Part 2 will be issued, following which action will be taken to reform both sets of rules to remove obstacles to value-based care and support efforts to combat the opioid crisis. Rule changes are also going to be made to remove some of the barriers to data sharing which are currently hampering efforts by healthcare providers to expand the use of electronic health technology.

These requests for information are part of a comprehensive review of current regulations that are hampering the ability of doctors, hospitals, and payers to improve the quality healthcare services and coordination of care while helping to reduce healthcare costs.

That process has already commenced with the Centers for Medicare & Medicaid Services (CMS) already having proposed one of the most fundamental changes to Medicare in recent years – A change to how physicians are paid for basic evaluation visits.

At present there are currently five tiers of payments for visits, with payments increasing for visits of increasing complexity. While this system makes sense, in practice in involves a considerable administrative burden on physicians, requiring them to justify why they are claiming for a visit at a higher tier. The CMS has proposed reducing the five tiers to two. That simple change is expected to save physicians more than 50 hours a year – more than a week’s work – with that time able to be diverted to providing better care to patients.

The CMS has also submitted a request for information of issues with Stark’s Law, which prevents physicians from referring patients to other physicians/practices with which they have a financial relationship, except in certain situations. Requests for information on HIPAA, Part 2, and the Anti-Kickback Statute will follow.

Healthcare providers that wish to voice their concerns about issues with HIPAA, Part 2, and the Anti-Kickback Statute should consider preparing comments and suggestions for policy updates to address those issues, ready for submission when the HHS issues its requests for information.

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Bill Proposes 18 Months Free Credit Monitoring Services for Data Breach Victims in Massachusetts

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A new bill has been introduced in Massachusetts that seeks to improve protections for consumers affected by data breaches. The bill calls for free credit monitoring services to offered to individuals whose personal information was exposed in a security breach.

The bill (H.4806) was filed on Tuesday by a House-Senate conference committee chaired by Rep. Tackey Chan and Sen. Barbara L’Italien and is a compromise bill between competing data security bills that were sent to the committee on May 3. The House Bill required consumers to be provided with a year of credit monitoring services following a data breach whereas the Senate bill required consumers to be provided with 2 years of credit monitoring services following a data breach.

The conference committee bill takes the middle ground, requiring 18 months of credit monitoring services to be provided to consumers free of charge following a standard security breach. However, a data breach at a credit monitoring company (Equifax, Experian, TransUnion) would require affected consumers to be provided with 42 weeks of credit monitoring services. This is also a compromise, as the Senate bill called for 5 years of free credit monitoring services to be provided to consumers following a breach at a credit reporting agency.

When consumers are notified that their personal information has been compromised in a data breach they are often advised to place a security freeze on their credit files as a protection against fraud. The fees charged for placing and removing security freezes varies state to state, although typically it costs $5 to $10.

Since breach victims are not to blame for the exposure of their personal data, many believe the placing and lifting of security freezes should not come at a cost. Some states already prohibit the charging of fees and in May 2018, President Trump signed the Economic Growth, Regulatory Relief and Consumer Protection Act, which will make placing and lifting security freezes free of charge from September. H.4806 similarly calls for the lifting of the charges.

The bill also requires companies to obtain consent from consumers before they are permitted to check an individual’s credit file or obtain a credit report.

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FDA Issues New Guidance on Use of EHR Data in Clinical Investigations

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The U.S. Food and Drug Administration has released new guidance on the use of EHR data in clinical investigations and the requirement to ensure that appropriate controls are in place to ensure the confidentiality, integrity, and availability of data.

While the guidance is non-binding, it provides healthcare organizations with valuable information on steps to take when deciding whether to use EHRs as a source of data for clinical investigations, how to use them and ensure the quality and integrity of EHR data, and how to make sure that any data collected and used as an electronic source of data meets the FDA’s inspection, recordkeeping and data retention requirements.

The aim of the guidance is to promote the interoperability of EHR and EDC systems and facilitate the use of EHR data in clinical investigations, such as long-term studies on the safety and effectiveness of drugs, medical devices, and combination products.

The guidance does not apply to data collected for registries and natural history studies, the use of EHR data to evaluate the feasibility of trial design or as a recruitment tool for clinical investigations, or the use of EHR data in postmarketing observational pharmacoepidemiologic studies that assess adverse events and risks associated with drug exposure or those that are designed to test prespecified hypotheses for such studies.

The FDA is aware that EHRs have the potential to provide researchers with access to real time data for reviews and allow post-trail follow ups on patients to determine the long -term effectiveness of specific treatments. They also provide access to the data or large numbers of patients, which can be particularly useful in clinical investigations, especially when certain outcomes are rarely observed. The use of EHR data in clinical investigations is broadly encouraged by the FDA.

However, it is important for best practices to be adopted to ensure patient privacy is protected, data integrity is maintained, and data are secured at all times.

The Health Information Technology for Economic and Clinical Health (HITECH) Act of 2009 required the Office of the National Coordinator of Health IT (ONC) to establish a voluntary certification program for Health IT. Certified EHRs comply with 45 CFR part 170 of the HITECH Act which covers interoperability and data security and confirms EHRs meet minimum requirements for privacy and security.

The FDA recommends that only certified EHR systems are used in clinical investigations and that policies and procedures on their use should be developed. The FDA recommends that a list of EHR systems is maintained, detailing the manufacturer of the system, the model number, version number, and whether it is certified by ONC.

There may be times when EHRs are de-certified by ONC during the clinical investigation, as they may no longer meet appropriate standards. In such cases, sponsors should determine the reason for de-certification and its impact on the quality and integrity of data used in the clinical investigation.

At times, it may be necessary to incorporate data from EHR systems used in other countries, which are not certified by ONC. While the use of data from these systems is acceptable, and can be highly beneficial for clinical investigations, sponsors should evaluate whether the systems have appropriate privacy and security controls in place to ensure the confidentiality, integrity, and availability of data.

Sponsors should ensure that policies and procedures for these EHRs are in place at the investigation site and appropriate measures have been implemented to protect study data. They must also ensure that access to the electronic systems housing the EHRs is limited to authorized personnel. Authors of the records must be clearly identifiable, audit trails need to be maintained, and records need to be available and retained for FDA inspection.

If these controls are not in place, sponsors should consider the risks associated with using those systems, including the potential for harm to research subjects, the impact on data integrity of the clinical investigation, and the regulatory implications.

The guidelines also suggest EHRs not certified by ONC should meet various data standards, and the guidance offers advice about choosing between structured and unstructured data, and the validation of interoperability between EHRs and electronic data capture (EDC) systems.

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New York Physician Notifies Patients of Exposure of their PHI

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A New York physician has started notifying patients that their protected health information has been exposed and has been potentially accessed unauthorized individuals.

Ruben U. Carvajal, MD was alerted to a possible privacy breach on January 3, 2018 and was informed that some of his patients’ health information was accessible over the Internet. An investigation into the possible privacy breach was launched and the matter was reported to the New York Police Department and the Federal Bureau of Investigation (FBI).

FBI investigators visited his office and examined his computer. On February 18, 2018, the FBI confirmed that the EMR program on his computer had been accessed by an unauthorized individual. A forensic investigator was called in to conduct a thorough investigation to determine the nature and scope of the breach.

On May 22, 2018 the forensic investigator determined that the physician’s computer had been accessed by an unauthorized individual between December 16, 2017 and January 3, 2018.

Any individual that gained access to the physicians’ computer could have gained access to the EMR system, although the forensic investigation did not confirm whether the program was accessed, although based on the findings of the FBI it can be assumed that this was the case.

The types of information that were potentially viewed and/or copied included names, addresses, birthdates, medical histories, diagnoses, treatment information, lab test results, medications, health insurance details, and claims information. Patients that receive Medicare also had their Medicare ID numbers and Social Security numbers exposed.

Dr. Carvajal started notifying patients about the breach on July 17, 2018 and patients have been offered complimentary credit monitoring and identity theft protection services. Steps have now been taken to improve security to prevent similar breaches from occurring in the future.

The incident has yet to appear on the Department of Health and Human Services’ Office for Civil Rights breach portal so it is currently unclear how many patients have been impacted by the data breach.

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Investigation Launched Over Snapchat Photo Sharing at M.M. Ewing Continuing Care Center

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Employees of a Canandaigua, NY nursing home have been using their smartphones to take and share images and videos of at least one resident and share the content with others via Snapchat – a violation of HIPAA and a serious violation of patient privacy.

The privacy breaches occurred at Thompson Health’s M.M. Ewing Continuing Care Center and involved multiple employees. Thompson Health has already taken action and has fired several workers over the violations. Now the New York Department of Health and the state attorney general’s office have got involved and are conducting investigations.

The state attorney general’s Deputy Press Secretary, Rachel Shippee confirmed to the Daily Messenger that an investigation has been launched, confirming “The Medicaid Fraud Control Unit’s mission includes the protection of nursing home residents from abuse, neglect and mistreatment, including acts that violate a resident’s rights to dignity and privacy.”

Thompson Health does not believe the images/videos were shared publicly and sharing was restricted to a group of employees at the care center. Thompson Health is contacting the families of the residents impacted by the breach to offer an apology.

This is not the first time that Thomson Health has discovered an employee had taken pictures and videos without people’s knowledge. In January, a camera was discovered in a unisex bathroom at Thompson Hospital. When the camera was taken down it was discovered that the memory card had been removed. The matter was reported to law enforcement although the employee responsible has not been identified.

M.M. Ewing Continuing Care Center is far from the only nursing home to discover that residents have been photographed and videoed without consent with videos and images shared on social media networks.

An investigation into the sharing of images of abuse of nursing home residents was launched by ProPublica in 2015. The investigation revealed the practice was commonplace, with several nursing home employees discovered to have performed similar acts. The investigation revealed there had been 22 cases of photo sharing on Snapchat and other social media platforms and 35 cases in total since 2012.

More recently, a nursing assistant at the Parkside Manor assisted-living facility in Kenosha, WI., was discovered to have taken photos of an Alzheimer’s patient and posted the images of SnapChat. When the violation was discovered, the nursing assistant was fired for the HIPAA breach.

The high number of cases involving these types of HIPAA violations prompted the CMS to take action in 2016. The CMS sent a memo to state health departments reminding them of their responsibilities to ensure nursing home residents were not subjected to any form of abuse, including mental abuse such as the taking of demeaning and degrading photos and videos and having the multimedia content shared on social media networks.

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June 2018 Healthcare Breach Report

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There was a 13.8% month-over-month increase in healthcare data breaches reported in June 2018, although the data breaches were far less severe in June with 42.48% fewer healthcare records exposed or stolen than the previous month.

In June there were 33 healthcare data breaches reported to the Department of Health and Human Services’ Office for Civil Rights and those breaches saw 356,232 healthcare records exposed or stolen – the lowest number of records exposed in healthcare data breaches since March 2018.

Healthcare Data Breaches (January-June 2018)

Healthcare Data Breaches (January-June 2018)

Healthcare Records Exposed (January-June 2018)

Healthcare Records Exposed (January-June 2018)

Causes of Healthcare Data Breaches (June 2018)

Unauthorized access/disclosure incidents were the biggest problem area in June, followed by hacking IT incidents. As was the case in May, there were 15 unauthorized access/disclosure breaches and 12 hacking/IT incidents. The remaining six breaches involved the theft of electronic devices (4 incidents) and paper records (2 incidents). There were no reported losses of devices or paperwork and no improper disposal incidents.

Causes of Healthcare Data Breaches (June 2018)

Healthcare Records Exposed by Breach Type

While unauthorized access/disclosure incidents were more numerous than hacking/IT incidents, they resulted in the theft/exposure of far fewer records. Compared to May, 157.5% more records were obtained by unauthorized individuals in theft incidents. There was a 56% fall in the number of healthcare records exposed/stolen in hacking/IT incidents and almost 74% fewer healthcare records exposed or stolen in unauthorized access/disclosure incidents.

Healthcare Records Exposed by Breach Type

Largest Healthcare Data Breaches (June 2018)

Hacking and phishing incidents were behind most (8) of the largest healthcare data breaches reported in June.

The largest breach was reported by the Med Associates, a provider of claims services to healthcare organizations. A computer used by one of the company’s employees was hacked and accessed remotely by an unauthorized individual. The device contained the PHI of 276,057 individuals.

HealthEquity Inc., Black River Medical Center, and InfuSystem Inc., all experienced phishing attacks that resulted in unauthorized individuals gaining access to email accounts containing ePHI.  The New England Baptist Health breach involved a patient list that was accidentally emailed to an individual unauthorized to receive the information.

The Arkansas Children’s Hospital breach was a case of snooping by a former employee, and the breach at RISE Wisconsin was a ransomware attack.

Breached Entity Entity Type Records Exposed Breach Type Location of PHI
Med Associates, Inc. Business Associate 276,057 Hacking/IT Incident Desktop Computer
HealthEquity, Inc. Business Associate 16,000 Hacking/IT Incident Email
Black River Medical Center Healthcare Provider 13,443 Hacking/IT Incident Email
New England Baptist Health Healthcare Provider 7,582 Unauthorized Access/Disclosure Email
Arkansas Children’s Hospital Healthcare Provider 4,521 Unauthorized Access/Disclosure Electronic Medical Record
InfuSystem, Inc. Healthcare Provider 3,882 Hacking/IT Incident Email
RISE Wisconsin, Inc. Healthcare Provider 3,731 Hacking/IT Incident Network Server
Gwenn S Robinson MD Healthcare Provider 2,500 Hacking/IT Incident Desktop Computer
Capitol Anesthesiology Association Healthcare Provider 2,231 Hacking/IT Incident Network Server
Massac County Surgery Center dba Orthopaedic Institute Surgery Center Healthcare Provider 2,000 Hacking/IT Incident Email

Location of Breached PHI (June 2018)

Email continues to be the most common location of breached PHI. In June, there were 9 email-related breaches reported to OCR. Seven of the nine email-related breaches involved unauthorized individuals accessing the email accounts of healthcare employees as a result of phishing attacks. One email-related breach involved PHI being sent to an individual unauthorized to receive the data and the cause of the other email-related breach has not been confirmed.

The high number of successful phishing attacks on healthcare organizations highlights the importance of ongoing security awareness training for all healthcare employees with email accounts. Once a year training sessions are no longer sufficient. Training programs should be ongoing, with phishing simulation exercises routinely conducted to reinforce training and condition employees to be more security aware. OCR reminded HIPAA-covered entities that security awareness training was a requirement of HIPAA and offered suggestions to increase resilience to phishing attacks in its July 2017 Cybersecurity Newsletter.

Unauthorized accessing and theft of paper records was behind 6 breaches, highlighting the need for physical controls to be implemented to keep physical records secure.

Location of Breached PHI (June 2018)

Data Breaches by Covered Entity Type

Healthcare providers experienced the most data breaches in June with 23 data security incidents reported. There was a marked month-over-month increase in health plan data breaches with six incidents reported compared to just two in May. Business associates reported six breaches in June, although in total, 10 incidents had some business associate involvement – on a par with May when 9 breaches involved business associates to some extent.

Data Breaches by Covered Entity Type

Data Breaches by State

California was the state worst affected by healthcare data breaches in June 2018, with 5 data breaches reported by healthcare organizations in the state. Texas saw four breaches reported, with three security breaches reported by Michigan-based healthcare organizations and two breaches reported by healthcare organizations in Florida, Missouri, Utah, Wisconsin.

Arkansas, Arizona, Iowa, Illinois, Massachusetts, Minnesota, Montana, North Carolina, New Jersey, New Mexico, New York, Pennsylvania, Washington each had one breach reported.

Penalties for HIPAA Violations Issued in June 2018

OCR penalized one HIPAA-covered entity in June for HIPAA violations – The fourth largest HIPAA violation penalty issued to date.

OCR investigated MD Anderson after three data breaches were reported in 2012 and 2013 – The theft of a laptop computer from the vehicle of a physician and the theft of two unencrypted thumb drives. 34,883 healthcare records were impermissibly disclosed as a result of the breaches.

OCR determined a financial penalty was appropriate for the failure to encrypt ePHI and the resultant impermissible disclosures of patient health information. University of Texas MD Anderson Cancer Center (MD Anderson) contested the penalty, with the case going before and administrative law judge. The ALJ ruled in favor of OCR.

University of Texas MD Anderson Cancer Center was ordered to pay $4,348,000 to resolve the HIPPA violations that led to the breaches.

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LabCorp Cyberattack Forces Shutdown of Systems: Investigators Currently Determining Scale of Breach

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LabCorp, one of the largest clinical laboratories in the United States, has experienced a cyberattack that has potentially resulted in hackers gaining access to patients’ sensitive information.

The Burlington, NC-based company runs 36 primary testing laboratories throughout the United States and the Los Angeles National Genetics Institute. The company performs standard blood and urine tests, HIV tests and specialty diagnostic testing services and holds vast quantities of highly sensitive data.

The cyberattack occurred over the weekend of July 14, 2018 when suspicious system activity was identified by LabCorp’s intrusion detection system. Prompt action was taken to terminate access to its servers and systems were taken offline to contain the attack.

With its systems offline, this naturally affected test processing and customers have been prevented from accessing their test results online. LabCorp expects some of its systems to remain offline for several days while efforts continue to restore system functionality and those systems are fully tested. Delays in processing lab test results are expected to continue to be experienced until its systems are fully restored and patients may continue to experience delays receiving their test results.

The investigation into the breach is still in the early stages and it has yet to be confirmed whether the hackers behind the attack managed to gain access to patients’ medical information. So far, no evidence has been uncovered to suggest any patient information was transferred outside its system.

LabCorp is involved in several drug development programs, although the attack is believed to be limited to LabCorp’s Diagnostics systems. The systems used by Covance Drug Development are not believed to have been affected.

The cyberattack has been reported to the Securities and Exchange Commission (SEC) and other relevant authorities have also been notified.

Once the nature of the breach has been established and the likelihood of unauthorized access to patient data has been determined, patient will be notified if appropriate.

LabCorp has followed standard breach protocol to contain the attack and prevent data exfiltration and limit harm, and the shutting down of its systems is no indication that patient data has been accessed. However, the UL’s the Daily Mail newspaper claims to have contacted a company insider who said the hackers potentially had access to the medical records of millions of patients.

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Children’s Mercy Hospital Sued for 63,000-Record Data Breach

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Legal action has been taken over a phishing attack on Children’s Mercy that resulted in the theft of 63,049 patients’ protected health information.

In total, five email accounts were compromised between December 2017 and January 2018. On December, 2, 2017  two email accounts were discovered to have been accessed by an unauthorized individual as a result of employees responding to phishing emails. Links in the emails directed the employees to a website where they were fooled into disclosing their email account credentials. Two weeks later, two more email accounts were compromised in a similar attack, with a fifth and final account compromised in early January.

The mailbox accounts of four of those compromised email accounts were downloaded by the attacker, resulting in the unauthorized disclosure of patients’ protected health information. Patients were notified of the breach via a substitute breach notice on the Children’s Mercy website and notification letters were sent by mail. Due to the number of people impacted, the letters were sent out in batches. According to a recent article in the Kansas City Star, some patients have only just been notified that their PHI was stolen.

In addition to the phishing attack, Children’s Mercy Hospital reported a further breach of 1,463 patients’ PHI to the Department of Health and Human Services’ Office for Civil Rights on June 27, 1018 – an unauthorized access disclosure incident. That incident related to the interception of unencrypted pages sent by physicians at the hospital. The pages were viewed by a radio hobbyist using an antenna and a software-defined radio (SDR) on a laptop computer. Children’s Mercy was not the only hospital affected by that incident.

An unauthorized access/disclosure incident was also reported to OCR by Children’s Mercy Hospital on May 19, 2017. That incident impacted 5,511 patients. In that case, PHI had been uploaded to a website by a physician. The website was unauthorized and lacked appropriate security controls.

Earlier this week, Kansas City law firm McShane and Brady filed a class action lawsuit over the phishing incident. In the lawsuit it is claimed that Children’s Mercy violated Missouri law and breached its fiduciary duty to patients.

“Patients trust health care providers with our medical information and when that is released without our authorization, they’re breaking our trust and breaching what we’ve asked them to do,” said Maureen Brady, partner at McShane and Brady. “When we pay them for our treatment, part of that price point goes to training and computer software and records maintenance and making sure our privacy is kept.”

While the lawsuit seeks damages for all patients impacted by the breach, those damages have not been stated in the lawsuit.

This is not the first time that legal action has been taken against Children’s Mercy Hospital over a privacy breach, and neither is it the first time McShane and Brady has sued the hospital. The law firm also filed a class action lawsuit over the 5,511-record breach in 2017.

There is no private cause of action in HIPAA, so it is not possible for patients to take legal action for the exposure of protected health information as a result of a HIPAA violation, although it is possible to sue healthcare providers over violations of state laws.

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Healthcare Data Breach Costs Highest of Any Industry at $408 Per Record

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A recent study conducted by the Ponemon Institute on behalf of IBM Security has revealed the hidden cost of data breaches, and for the first time, the cost of mitigating 1 million-record+ data breaches.

The study provides insights into the costs of resolving data breaches and the full financial impact on organizations’ bottom lines. For the global study, 477 organizations were recruited and more than 2,200 individuals were interviewed and asked about the data breaches experienced at their organizations and the associated costs. The breach costs were calculated using the activity-based costing (ABC) methodology. The average number of records exposed or stolen in the breaches assessed in the study was 24,615 and 31,465 in the United States.

Last year, the Annual Cost of a Data Breach Study by the Ponemon Institute/IBM Security revealed the cost of breaches had fallen year over year to $3.62 million. The 2018 study, conducted between February 2017 and April 2018, showed data breach costs have risen once again.

The average cost of a data breach is now $3.86 million – An annual increase of 6.4%. The per capita cost of a data breach has risen by 4.8%, from $141 per record in 2017 to $148 per record in 2018.

Data breaches are costlier to resolve in the United States, where the average cost was $7.91 million. The cost of a data breach also varies considerably between industry sectors. The highest data breach resolution costs are for healthcare data breaches, which typically cost an average of $408 per record. This is considerably higher than financial services data breaches in second place, which cost an average of $206 per record. The lowest costs were in the public sector, with costs of $75 per record.

The type of breach has a bearing on the cost. Cyberattacks by malicious insiders and criminals cost an average of $157 per record, system glitches cost an average of $131 per record to resolve, while breaches caused by human error cost an average of $128 to resolve.

The mean time to identify a breach was 197 days and the mean time to contain a breach was 69 days. The time taken to identify and contain breaches both increased in the past year, which has been attributed to an increase in the severity of cyberattacks in this year’s sample.

Suffering one breach is bad enough, although many companies experience multiple breaches. IBM determined that companies that experience a data breach have a 27.9% chance of experiencing a second material breach within two years.

The Cost of Mega Data Breaches

For the first time, Ponemon/IBM analyzed the costs of mega data breaches, which are data breaches that have resulted in the theft or exposure of more than 1 million records. The number of mega data breaches experienced has nearly doubled in the past five years from 9 in 2013 to 16 in 2017.

The average time to detect and contain these mega data breaches was 365 days – almost 100 days longer than smaller data breaches which took an average of 266 days to detect and contain.

These mega data breaches can prove to be incredibly costly to resolve. The average cost of a mega data breach involving 1 million records is $40 million. That figure rises to an average of $350 million for a breach involving the exposure/theft of 50 million records. The biggest cost of these mega data breaches is loss of customers, typically costing $118 million for a 50-million record breach.

For the study, the costs of breach mitigation were divide into four areas; Detection and escalation, notification, post data breach response, and lost business cost. The costs for mega data breaches are detailed in the table below:

 

Source: IBM Security

Factors that Affect the Cost of a Data Breach

As with previous studies, Ponemon/IBM identified several factors that can have an impact on the cost of data breaches.

“Knowing where the costs lie, and how to reduce them, can help companies invest their resources more strategically and lower the huge financial risks at stake,” said Wendi Whitmore, Global Lead for IBM X-Force Incident Response and Intelligence Services (IRIS).

The time taken to identify and contain a breach has a significant bearing on cost. When companies can contain a breach within 30 days they typically save around $1 million in breach resolution costs.  Companies that identified and contained a breach within 100 days spent around $1 million less than those that took longer than 100 days.

The most important factor affecting the cost of a data breach is having an incident response team in place, which reduces the breach cost by an average of $14 per compromised record. In second place is the widespread use of encryption, which reduces the cost of a data breach by $13 per record.

Business continuity management reduced the per capita cost by $9.3 as did employee training. Participation in threat sharing reduced the per capita cost by $8.7 and use of an artificial intelligence cybersecurity platform reduced the cost by $8.2.

One of the biggest costs following a data breach is loss of customers. All businesses experience churn following a breach, although steps can be taken to reduce churn. Organizations that implement programs to preserve trust and loyalty before a breach experience lower churn rates, as do companies that have a chief Privacy Office (CPO) or Chief Information Security Officer (CISO) to direct initiatives to improve customer trust in the guardianship of personal information. When businesses offer identify theft protection and credit monitoring services to breach victims, churn rate is reduced.

Companies that lost 1% of their customers as a result of a breach had an average total cost of $2.8 million, whereas a loss of 4% or more customers saw breach costs rise to an average of $6 million – a difference of $3.2 million.

When companies employ security automation the cost of data breaches falls to $2.88 million per breach, although without any security automation the average breach cost is $4.43 million – a difference of $1.55 million per breach.

The main factors that increase the cost of a data breach are third-party involvement, which increases the cost by $13.4 per record. If a company is experiencing a major cloud migration at the time of the breach the cost increases by $11.9 per record. Compliance failures also increase the breach cost by $11.9 per record.

Extensive use of mobile platforms increases the breach cost by $10 per record while companies that extensively use IoT devices add $5.4 per record to data breach costs.

While breach victims need to be notified as soon as possible, rushing to issue breach notifications before all the facts have been obtained increases the cost of the data breach by $4.9 per record.

The 2018 Cost of a Data Breach Study can be viewed on this link.

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