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CISO AppSec Guide: Value of Data & Cost of an Incident

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Appendix A: Value of Data & Cost of an Incident

This is quick reference for providing guidance on how to assign monetary value to information assets to determine the monetary impact for the organization in the case of such assets will be lost because of a security incident. Included in this appendix are also a simple formula to determine the potential liability risk in case of data loss incidents and a data breach calculation tool to estimate the cost of a data breach based upon statistical data.

Value of Information

The selection of security measures must consider the value of asset being protected. Like personal data, all types of data can have value determined from a number of different perspectives. While it may be most common the look at the value of data by its value as an asset to the organization or the cost of an incident, these are neither always the most appropriate nor greatest valuations to consider. For example, a report looking at the value of personal data (personally identifiable information) suggests four perspectives from which personal information draws its privacy value. These are:

  • Its value as an asset used within the organization’s operations
  • Its value to the individual to whom it relates
  • Its value to other parties who might want to use the information, whether for legitimate or improper purposes
  • Its societal value as interpreted by regulators and other groups.

The value to the subject of the data, to other parties or to society may be more appropriate for some organizations than others. The report also examines the wider consequences of not protecting (personal) data and the benefits of protection. It describes how incidents involving personal data that lead to financial fraud can have much larger impacts on individuals, but that financial effects are not the only impact. The report provides methods of calculation, and provides examples where the value of an individual's personal data record could be in the £500-£1,100 (approximately $800-$1,800) in 2008.

Data Breaches and Monetary Losses

Regarding the monetary loss per victim, exact figures vary depending on the factors that are considered to calculate them depending by the type of industry and the type of attack causing the data loss incident. According to a July 2010 study conducted by Ponemon Institute on 45 organizations of different industry sectors about the costs of cyber attacks, the costs of web-based attacks is 17% of the annualized cyber-attack costs. This cost varies across different industry sectors with the higher costs for defense, energy and financial services ($16.31 million, $15.63 million and $12.37 million respectively) than organization in retails, services and education.

Also according to the 2011 Ponemon Institute annual survey of data loss costs for U.S. companies, the average cost per compromised record in 2010 was $214 up 5% from 2009. According to this survey, the communication sector bear the highest cost of $380 per customer record with financial services the second highest cost of $353 followed by healthcare with $345, media, at $131, education at $112 and the public sector at $81.

The security company Symantec, which sponsored the report, developed with Ponemon Institute a data breach risk calculator that can be used to calculate the likelihood of data breach in the next 12 months, as well as to calculate the the average cost per breach and average cost per lost record.

The Ponemon institute direct costs estimates, are also used for estimating the direct cost of data breach incidents collected by OSF DataLossDB. 2009 direct cost figures of $60.00/record are multiplied by the number of records reported by each incident to obtain the monetary loss estimate. It is assumed that direct costs are suffered by the breached organizations while this is not always true such as in the case of credit card number breaches where the direct costs can often be suffered by banks and card issuers. Furthermore, estimate costs does not include indirect costs (e.g. time, effort and other organizational resources spent) as well as opportunity costs (e.g. the cost resulting from lost business opportunities because of reputation damage).

Another possible way to make a risk management decision on whether to mitigate a potential loss is to determine if the company will be legally liable for that data loss. By using the definition of legal liability from a U.S. liability case law, given as Probability (P) of the loss, (L) the amount of the Loss, then there is liability whenever the cost of adequate precautions or the Burden (B) to the company is:

      B < P x L

By applying this formula to 2003 data from the Federal Trade Commission (FTC) for example, the probability of the loss is 4.6% as the amount of the population that suffered identity fraud while the amount of the loss x victim can be calculated by factoring how much money was spent to recover from the loss considering the time spent was 300 million hours at the hourly wages of $ 5.25/hr plus out of pocket expenses of $ 5 billion:

     L = [Time Spent x Recover From Loss x Hourly Wage + Out Of Pocket Expenses]/Number of Victims

With this formula for calculating the amount of loss due to an identity fraud incident, based upon 2003 FTC data, the loss per customer/victim is approximately $ 655 dollars and the burden imposed to the company is $ 30.11 per customer/victim per incident.

The risk management decision is then to decide to whether it is possible to protect a customer for $ 30.11 per customer per annum. If it is, then liability is found and there is liability risk for the company. This calculation can be useful to determine the potential liability risk in case of data loss incidents, for example by applying the FTC figures to the TJX Inc. incident of 2007 where it was initially announced the exposure of confidential information of 45,700,000 customers, the exposure to the incident for the victims involved could be calculated as:

    Cost exposure to the incident = Number of victims exposed by the incident x loss per victim

With this formula using TJX Inc data or number of victims affected and by applying the loss per victim using FTC data, the cost of the incident that represents the loss potential is $ 30 Billion. By factoring this with the probability of the incident occurring, then it is possible to determine how much money should be spend in security measures. In the case of TJX Inc incident for example, assuming a 1 in 1000 chance of occurrence a $ 30 Million security program for TJX Inc would have been justifiable.

Data Breach Calculation Tools

A calculator for estimating the cost incurred by organizations, across industry sectors, after experiencing a data breach is provided by Symantec based upon data surveys of the Ponemon Institute:

Estimating the Probability of Vulnerability Exploits

To estimate the probability of a specific web application vulnerability exploit, we can refer to data reports from the Web Hacking Incident Database (WHID). The WHID is a Web Application Security Consortium (WASC) project to provide statistical analysis information of web application security incidents collected from public sources. in 2010 WHID categorized 222 incidents and observed that 33% of the incidents aimed to take down web sites (e.g. with Denial of Service), 15% aimed to deface web sites and 13% to steal information. Among the overall type of attacks the ones that sought to exploit application vulnerabilities such as SQL injection were 21%.

By using 2010 WHID data of reported incident and analysis, the overall probability of an attack aimed to steal information by exploiting of a SQL injection vulnerability is therefore 13 % x 21 % = 2.7%. Since SQL injection was also reported to be used for defacement, this ought to be considered as rough estimate.

In another survey of malicious web attack traffic observed over a period of six months, December 2010 through May 2011 from the security company Imperva, SQL injection was identified in 23% of the attacks as third most prevalent after cross site scripting, the second most prevalent in 36% of the attacks and directory traversal as the most prevalent in 37% of all the attacks.

Estimating the Business Impact of Vulnerability Exploits

By comparing WHID and Imperva web attack surveys, an order of magnitude of 21-23% for attacks exploiting SQL injection vulnerability seems an acceptable rough estimate. By assuming the cost of data loss of security incident for a financial organization of $355/record (Ponemon Institute 2010 data), and that the probability that such incident exploits a SQL injection vulnerability is 2.7% (WHID 2010 data), the 2010 liability for a company's web site such as online banking for a data loss of 1 million records is thus $ 9,585,000. With this figures a 2010 budget of $9 Million spent by a financial organization for application security measures specifically focused to prevent risks of data losses due to SQL injection attacks would have been justifiable.

Assuming that you will spend as much in security measures, this is the maximum amount estimated for expenses in security measures to thwart SQL injection attacks that includes acquisition of technology for secure software development, documentation, standards, processes, tools as well costs for the recruitment of qualified personnel and secure coding training especially for web developers. Normally this dollar figure ought to be considered a maximum value since assumes for example a total loss of the user data.

It is important to notice that injection vulnerabilities are considered by OWASP (2013 A1-Injection) the most critical application security risks for opportunistic vulnerability exploits. OWASP rates the risk of data injection, including SQL injection vulnerability, as severe since "can result in data loss or corruption, lack of accountability, or denial of access and sometimes lead to complete host takeover". The business impact that we calculated as liability for a medium size financial services company (1 million registered online banking users) assumes that the value of the data assets can be stolen by a threat agent to cause tangible harm to the company.

Historically, SQL injection attacks have been of high impact and in the United States, have been associated with the largest data breach incidents ever committed and prosecuted. In the August 2009 U.S. indictment case against Albert Gonzalez (also indicted in May 2009 in Massachusetts for the TJX Inc breach) and other two Russian hackers, SQL injection attacks were used to break into 7-Eleven network in August 2007 resulting in the theft of credit card data. Allegedly, the same kind of attack was also used to infiltrate Hannaford Brothers in November 2007 which resulted in 4.2 million debit and credit card numbers being stolen and to steal 130 million credit card numbers from Heartland Payment Systems on December 2007. In 2010, Albert Gonzalez was found guilty and sentenced to serve 20 years in federal prison while Heartland paid about $ 140 million in fines and settlements because of the security breach.


We can see that there are different ways to determine the value of information and that some of these are purely based on the costs relating to data breaches. But overall, the references suggest that typically individual's data can be valued in the range $500 to $2,000 per record.