According to the recently released report, "Why Compliance Pays: Reputations and Revenues at Risk" by the IT Policy Compliance Group, nine in ten firms are exposed to financial risk from data loss and theft. These risks could be significantly reduced by implementing core procedural and technical controls and monitoring those controls at least once every two weeks.
Among larger enterprises, the probability of a publicly disclosed data loss is likely once every three years if the firm is currently operating as a laggard. In contrast, organizations with the best results have delayed the probability of data loss to once in every 42 years. The benchmarks show that the organizations excelling at compliance are the same firms with the least data losses and the least business disruptions from IT downtime.
"The vast majority of businesses and public institutions are still struggling with high rates of annual compliance deficiencies, resulting in business disruption, data loss and theft," said James Hurley, senior research manager, Symantec Corp. and managing director, IT Policy Compliance Group. "While the probability of data loss and business disruption occurring in an organization is less a matter of 'if' than 'when,' there are a number of compliance, risk and governance practices that, if implemented correctly, could significantly reduce the frequency and impact of these events."
The Cost of a Data Breach
According to Attrition.org's Data Loss Database, the U.S. has averaged almost 280 publicly exposed incidents of data theft or loss annually over the last two years. This average will likely rise given the increasing focus on data breaches by consumers, regulatory bodies and governments. According to the latest IT Policy Compliance Group report, these losses can have significant business impact. Benchmarks show organizations experiencing a publicly reported data loss expect to see an eight percent decline in customers and revenue, an eight percent decline in the price per share for publicly traded firms, and additional expenses averaging US $100 per lost customer record for firms experiencing publicly disclosed data losses and thefts.
Best Practices from Compliance Leaders
The research shows that successful firms, those with the fewest data losses and thefts, are driving operational excellence in IT by improving compliance results, especially in IT general controls and IT security controls and procedures. More notable, the benchmarks show the least data loss among firms that are monitoring and measuring controls against objectives consistently, at least once every two weeks.
"An effective IT governance process with concise IT control objectives, along with the right mix of built-in IT controls, allow businesses to set policies and measure against those policies in a consistent manner," said Everett C. Johnson, CPA, International President of ISACA and the IT Governance Institute. "By creating a measurable and repeatable IT compliance program, businesses are able to adequately produce data and ensure a high level of compliance."
Based on what is working among organizations with the fewest data losses, the report identifies practices that will assist businesses with improving IT compliance results, reduce business downtime, and reduce data loss and theft. These steps include:
- Implementing more and appropriate IT controls
- Reducing control objectives, making it easier to communicate, measure and report against
- Establishing higher standards for performance objectives
- Encouraging a culture of operational excellence in IT
- Conducting monitoring, measurement and reporting of controls against objectives at least once every two weeks
- Allocating more spend to controls automation
In addition to spending larger percentages of the IT budget on IT security controls, the firms with the fewest undisclosed latent data losses and least number of compliance deficiencies are reallocating monies away from external contract spend towards additional funding of equipment and software, specifically targeted at automating the monitoring and measurement of controls and procedures.
"Control advocates have always been pressed to justify allocating resources on additional controls. This report provides supporting evidence that the appropriate additional controls are not only warranted, but essential to prevent theft and loss," said Rocco Grillo, a managing director in the Technology Risk practice of Protiviti Inc. "The report also links system resiliency with compliance. That is a novel perspective, however, as the paper indicates, there are great linkages between effective controls and resiliency."