United States: Data Breach - Your Organization Needs A Plan

The Privacy Rights Clearinghouse's Chronology of Data Breaches lists 3,671 incidents affecting 607,295,463 records since 2005,1 including these three:

  • A worker steals customer records containing credit card, bank account and other personal information. In its U.S. Securities and Exchange Commission filing, the company estimates that 8.5 million records are affected.
  • A password-protected laptop containing former employee names, Social Security numbers, birthdates, and benefits information is stolen from a consultant's trunk with an estimated 5,800 records affected.
  • Cyber-pickpockets tamper with PIN pads in retail stores and steal banking information from checkout keypads. Ninety-four thousand records are affected.

Taking steps to protect personal information can go a long way to preventing a security breach. No technology is failsafe, however.

Today most companies come in contact with or store personal information. This is not only the domain of large organizations, relatively small ones face potential liability should personal information be compromised in a security breach of the organization's computer systems. The potential for disclosure of personal information exposes all organizations to potential liability for damages and the cost of breach notification and remediation.

The most recent Ponemon Institute Cost of Data Breach Study reports that whether the result of lost laptops, misplaced thumb drives, malicious software, or system glitches, data breaches carry very serious financial consequences — costing on average a breathtaking $5.5 million per data breach — or $194 in direct and indirect costs per record compromised.2 Forensic experts, outsourcing hotline support, free credit monitoring subscriptions and discounts for future products and services account for one-third of the $194 per record cost of a data breach. Loss of reputation, damage to brand, and the cost of in-house investigation and communication account for the other two-thirds. Senior level managers estimate that it can take a year to restore an organization's reputation after a data breach involving 100,000 customer records that is reported widely in the media.3

To manage reputation, contain costs and business disruption, and stay within the law, your organization needs a plan. Four factors drive up the cost of a data breach: inexperience, involvement of third party providers, data breaches involving mobile devices, and quick notification of breach victims.4

Organizations responding to and remediating their first data breach spend $37 more per record than those who have dealt with a data breach before. Experience sharpens intuition. It also drives home the need for a response plan. Do you have a written response plan?

Data breaches caused by outsourcers, cloud providers or business partners cost $25 more per record than breaches with an "in-house" cause. Do your contracts with third parties address data breaches? Do they require them to comply with your data security standard?

A data breach involving lost or stolen mobile devices, such as laptops, smartphones, tablets and USB drives, costs $23 more per record than breaches involving other hardware. Are your mobile devices encrypted?

Notifying victims quickly increases costs by $32 per record. Timing of notice needs to comply with applicable law. Moving too quickly, that is before you have adequate information for meaningful notification, however will likely be more costly to the organization and less helpful to the breach victim. Will you have privacy counsel to advise you on the legal notification requirements for breach victims and others?

What are the attributes of organizations whose direct and indirect costs for a data breach fall below the average? They designate an information security leader with organization- wide responsibility, and they hire external experts to assist with response and remediation, saving $79 and $41 respectively per record compromised.5

The results of the Ponemon Institute Cost of Data Breach Study underscore the observations of every expert on privacy compliance and data security — an organization needs to be prepared. Designate a response team. Inventory and classify data. Educate employees about privacy issues. Prepare a "what if?" action plan. Your business, your customers and your employees will benefit.

Designate a Team

Set the tone for the organization's commitment to data security. Your team may look different from other organizations, but begin by designating a well-respected senior official who has a track record of working well with every part of the organization, and give this person a hotline to the head of the company. A team should also typically include inside members from legal, communications, information technology, human resources and compliance. Outside members should include outside counsel, public relations, electronic forensics consultants and law enforcement. Keep contact information for team members current so that team members can be contacted quickly when necessary.

Inventory, Classify and Educate

  • Inventory records systems, computing systems and storage media containing personal information.
  • Classify personal information according to sensitivity.
  • Conduct ongoing employee training to promote awareness of security and privacy policies.
  • Require service providers and business partners who handle personal information to follow your security policies.

Make a Plan

Draft contingency plans for how your organization will respond to different security incidents. Some threats come out of left field; others such as a lost thumb drive or malicious attack — are foreseeable. Among the practices and information that should be included in a response plan are:

  • Written procedure for identifying a breach incident that warrants activating the response team.
  • Written procedures for internal notification of security incidents that may involve unauthorized access to sensitive personal information.
  • Measures to control, contain and correct a security incident.
  • Ongoing training of employees in their role and responsibilities in the response plan.
  • Immediate notification by data custodians of detected security incident.
  • Identification of law enforcement contacts for security incidents that may involve illegal activity.
  • Identification of government agencies you are required to notify of a breach.
  • Prior consent to notify affected individuals by email if such consent is required.
  • Protocol for documenting response to security incident.
  • Written procedures for notification of individuals to the extent required by applicable law.

Your Organization Suspects a Data Breach — What Now?

If employees suspect a security breach, investigate it immediately. Containment — stopping the access to or distribution of personal information — is the first priority. A computer forensic expert can assist in determining whether personal information was involved in the data breach and identify the affected persons. Meanwhile, legal counsel should address potential regulatory violations, ensure that evidence is preserved for use in court or an agency investigation, consider liability of third party providers and determine whether breach notification is required and how notice will be accomplished, including timing, content and method of notice.

Breach notification statutes have been criticized for creating "a fragmented, incoherent liability scheme."6 Federal statutes that focus on particular economic sectors such as healthcare and financial services, including the Health Insurance Portability and Accountability Act (HIPAA), the Health Information Technology for Economic and Clinical Health Act (HITECH) and the Gramm-Leach-Bliley Act (GLBA), require notification under certain circumstances. In addition, 46 states have enacted breach notification laws. State breach notification laws cause compliance challenges for organizations engaged in interstate commerce. Variations in state security breach notification law have been described as "so numerous that it is virtually impossible to convert these state laws into the more manageable format of fifty-state surveys."7 Consult with legal counsel before you decide:

  • With whom to communicate?
  • What to communicate?
  • How to communicate?
  • When to communicate?


1. A chronology of data breaches is available at Chronology of Data Breaches, Privacy Rights Clearinghouse, http://www.privacyrights.org/data-breach (last accessed May 5, 2013).

2. Ponemon Institute LLC, 2011 Cost of Data Breach Study: United States (March 2012).

3. Ponemon Institute LLC, "Reputation Impact of a Data Breach" (October 2012).

4. Ponemon Institute LLC, "2011 Cost of Data Breach Study: United States" at pp. 8-10 www.ponemon.org/local/upload/file/2011_US_CODB_FINAL_5.pdf.

5. Id. at p. 10.

6. Winn, Jane K., "Are 'Better' Security Breach Notification Laws Possible?" 23 (June 8, 2009) Berkley Technology Law Journal, Vol. 24, 2009. Available at SSRN: http://ssrn.com/abstract=1416222.

7. Tom, Jacqueline May, "A Simple Compromise: The Need for a Federal Data Breach Notification Law," 84 St. John's Law Review 1569 (2010).


The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Ogletree, Deakins, Nash, Smoak & Stewart
Lewis Brisbois Bisgaard & Smith LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Ogletree, Deakins, Nash, Smoak & Stewart
Lewis Brisbois Bisgaard & Smith LLP
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions