NZ: making the cost of a data breach explicit

August 22, 2007 at 9:40 pm Leave a comment

The latest move by Veda Advantage (formerly Baycorp) may make the cost of managing the result of a data breach for organisations more explicit.

Let me explain.

Veda Advantage is the dominant of the two NZ credit checking companies. Reportedly it has 1.5 million personal credit files. By my calculations, that’s just under half of the entire country’s population aged 15 and above.

They have just launched a service called My Credit Alert where, for about (NZ) $40 per year, people are notified of any change made to their personal credit file. This could be a credit enquiry, change in personal details, or adverse information.

In addition, Veda Advantage already has My Credit File which provides a copy of a person’s credit file for $23 (free if you’re willing to wait 10 days).

That’s a total of $63 for a copy of a person’s credit file and one year of alerts to changes.

Now, as previously noted, it seems likely that data breach notification laws are coming. Organisations will be able to estimate the costs of reputational damage, regulatory overhead, and the customer notification themselves.

But what will a customer who receives the notification do?

My guess is that organisations will mollify irate customers by paying for them to get a copy of their credit file and monitor changes for identity theft for a year. That’s $63 per customer record breached.

This then makes the cost of a data breach more explicit in $ terms. Given that most organisations are much better at making decisions when things can be expressed in $ terms, the cost of protecting customer information versus the cost of a breach makes good security the right economic choice.

Of course that means Veda Advantage becomes the biggest financial gainer from data breach notification laws. That’s why I think the launch of My Credit Alert is a great business move on their part.

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Entry filed under: data_breach, fraud, identity, NZ, personal_info, privacy, security, strategy.

NZ: the luxury of physical security US: data breaches

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