KUHN CAPITAL Monday, October 23, 2017
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The Data Theft Scourge

3/20/06

In the past 13 months, according to InformationWeek, the personal data of 54 million people -- consumers, employees, students, and patients -- have been involuntarily exposed.

We believe this staggering number is actually an undercount. Many organizations minimize the scope of such losses or report them grudgingly: who wants to advertise a shoddy security system and precipitate a crisis in consumer confidence?

Under-reported or not, the public's perception of vulnerablity is on the rise: Ponemon Institute surveys say that about 65% now believe they will at some time become the victim of identity theft.

The sources of data loss are varied. Leading last year’s hit parade are:
1) CardSystems (40 million files lost);
2) Citigroup (3.9 million);
3) DSW Shoe Warehouse (1.4 million);
4) Bank of America (1.2 million);
5) Wachovia, BoA, PNC, Commerce Bancorp (676,000);
6) Time Warner (600,000);
7) GA Department of Motor Vehicles (465,000);
8) LexisNexis (310,000);
9) University of Southern California (270,000);
10) Marriott (206,000).

Likewise, the causes are many. They range from external hacker penetration to tapes mysteriously lost in transit, to identity theft by employees, to Internet phishing, to inadvertent disclosure by companies where the lights are on but apparently nobody’s home. The list is as long as inattention and the cleverness of thieves will permit.

What’s the solution? Certainly not some single technical advance. The bag leaks in too many places for that. Rather the first step is one of attitude adjustment. Those who collect and in many cases hoard information about you have been astoundingly casual, despite the fact that such data are obviously hugely valuable.

Given the right attitude, the second step is a comprehensive security audit and continuous process monitoring. Of course this is expensive, but what’s the alternative? Lawsuits, regulation, loss of brand reputation and plenty of human misery.

So we’re quite bullish on the prospects of vendors who offer these sorts of consulting services and related software. And let’s hope they’re good enough at their job to preserve perhaps the greatest achievement of modern commerce, the Internet-driven electronic transaction.


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