As many as 110 million customers may be affected by the massive data breach that hit Target during the holiday shopping season.
In early January, the retail giant announced that the personal information of an additional 70 million customers—including their names, addresses and phone numbers—may have been stolen. This is much worse than its initial estimate that 40 million customers’ payment data was stolen.
As more details of the breach emerge, find out how cyber insurance is helping Target get through every company’s worst nightmare.
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 The Horton Group, Inc. to learn more about cyber insurance.