Lessons From Target's Data Breach Fumble

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Lessons From Target's Data Breach Fumble
Joe Raedle/Getty Images
By Jennifer Schlesinger | @jennyanne211

As the risk of data breaches are on the rise, so are the number of attacks and financial impact on American businesses.

For executives at companies experiencing data breaches, the consequences can be even more dire. It can cost managers their jobs.

Five months after Target's (TGT) holiday data breach, the retailer's former chairman and chief executive Gregg Steinhafel stepped down from his more than $23 million-a-year position. While Steinhafel also faced criticism for Target's Canadian expansion, the massive breach -- which included leaked credit and debit card information for millions of customers -- likely played a role, according to analysts.

"Gregg [Steinhafel] led the response to Target's 2013 data breach. He held himself personally accountable and pledged that Target would emerge a better company," the company said in a May 5 statement.

Craig Carpenter, a chief strategist at cybersecurity company AccessData, said the information security community believes the resignation will "help raise information security to a C-level [corporate] issue."

Business managers are paying closer attention to information security because the costs of data leaks only are expanding.

Since last year, data breaches on average have risen 15 percent to $3.5 million, according to a new study by IBM (IBM) and the Ponemon Institute, a researcher on data protection and information security.

The costly damage to a business includes expenses related to seeking experts' help, the actual company investigation and any loss of customers. Part of the 15 percent increase can be attributed to more customer records being stolen.

Here's what corporate executives and business managers need to learn about data breaches.

Cybersecurity Is Everyone's Issue

After data breaches, the person who usually takes blame is the chief information security officer or the chief information officer, Carpenter said. In the case of Target, the chief information officer resigned in March before the chief executive's departure.

The acknowledgement that all senior managers are responsible for data security is part of the challenge.

A study by cybersecurity firm Stroz Friedberg found that just 45 percent of senior management acknowledged they are responsible for protecting against cyberattacks.

Shawn Henry -- cybersecurity expert and a former executive assistant director of the FBI -- said companies need to acknowledge every employee is responsible for cybersecurity, not just the tech guys. "Technology is a piece of the solution but it's not the sole solution," said Henry, now president of cybersecurity company CrowdStrike Services.

Detect Breaches and Mitigate Effects

Experts also told CNBC that companies receive so many cybersecurity threats that they need to learn to detect breaches and mitigate the effects, instead of setting the unrealistic goal of trying to block all attacks.

AccessData's Carpenter said larger companies see thousands of cybersecurity alarms every day.

Communication Is Key

Corporate executives also need to learn how to effectively communicate data breaches, Henry said. Letting consumers know about a breach early on can help prevent damage to a business's reputation.

Target waited to comment on their breach until after it was announced by security blogger Brian Krebs. Then, the retail giant revealed in January that even more customers were affected than originally announced.

"[Businesses] need to understand what to do when they face one of these breaches, who to communicate with, how they rally their troops, how they deal with regulators," Henry said.


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dubricus

IMHO, the security issue is one of the straws that will break the camel's back of our current, globalized, electronic civilization. I don't believe that there will ever be a way to defend against hacking. Hackers only have to find 1 hole, everyone else must try to defend against everything. If we ever reach a point at which we have open cyber war between major powers (I include nations, corporations, & organized crime as major powers), the entire electronic system will fracture, because we have opened up countless ways even into our own homes that can be tapped. Our electronic, globalized world depends on 2 things - cheap, absolutely reliable electricity to power all those servers, computers, etc (which are only getting more & more electricity hungry) & safe, secure transfer of electronic data..... 2 other disruptors would be if transportation of goods & people were to become unsafe (due to piracy or terrorism or hacking) & limitations of access, speed, etc on the Internet. I'm not sure you can have a secure Internet while also having unlimited access.

May 12 2014 at 10:11 AM Report abuse rate up rate down Reply