To avoid crippling financial damage and loss of member trust, credit unions must implement measures to prevent data breaches and have a solid mitigation plan if one occurs.
Otsuka, addressing CUNA Mutual’s Online Discovery Conference Tuesday, cited the 2010 Annual Global Fraud Report by the risk management consulting firm, Kroll.
The study indicated the information-rich financial services industry led the way in data theft incidents at 42% in 2010, up from 24% in 2009.
“Data breaches have quickly become a top concern,” Otsuka said. “They are increasing in frequency and severity in terms of number of records breached and recovery costs.”
Breaches can involve electronic data or paper and occur in many ways, including:
- Lost or stolen disks, laptops, and other data-bearing devices;
- Dishonest employees;
- System intrusions by hackers;
- Negligent disposal of data; and
- Breaches at third-party vendors housing confidential personal member data.
A data breach can be devastating for a credit union, Otsuka said. A 2010 Ponemon Institute study stated the average cost to repair a compromised record was $214. For financial institutions, that cost was $353.