Forget hackers; companies responsible for most data breaches, study says

More than 1.9B records compromised in the past 26 years

In the five minutes it might take to read this article, about 672 electronic records containing confidential information will be compromised. By year's end, more than 72 million records with Social Security numbers, credit card numbers, birth dates and other personal data will have been exposed. That rate is about 200,000 more records per month than last year.

And the main culprit is not the oft-vilified rogue hacker, but corporate America, according to a new study by the University of Washington, Seattle.

That conclusion is based on a review of 550 security breaches reported in major U.S. news media outlets from 1980 to 2006. The goal of the study was to examine the role of organizational behavior in privacy violations. It showed that internal foul-ups such as putting personally identifiable information accidentally online, missing equipment, lost backup tapes or other administrative errors were responsible for 61% of the incidents.

In contrast, just 31% of the incidents were perpetrated by external hackers; 9% had unspecified causes.

"What this shows is that a surprising number of incidents actually involve corporate mismanagement more than hackers," said Philip Howard, assistant professor of communication at the University of Washington and co-author of the report. "I think it is easier when your company loses a lot of client data to put an immediate spin on it and blame it on a hacker or some external guy using some ingenious hacking technique."

The reality, though, is that in more cases than not, internal errors caused the data breach, he said.

Howard's study reinforces similar findings from other research. A report released last week by the IT Policy Compliance Group showed that human error is the overwhelming cause of losses of sensitive data -- contributing to 75% of all occurrences, while malicious hacking activity contributed to just 20% of data losses. According to that report, the primary channels for data loss involve laptops and mobile devices as well as e-mail and instant messages.

Similarly, in an informal survey of attendees at last week's Computerworld Premier 100 IT Leaders Conference, respondents picked "activities by internal staffers" as the biggest source of security breaches, followed by "ineffective policies" and "sloppy mobile workers." External hackers were fingered as the source in just 11% of the cases.

Even in incidents that were publicly blamed on external hackers, the reality is a bit more nuanced, Howard said. One example was the huge data breach at Acxiom Corp. in 2003, when an external data broker stole 1.6 billion customer records containing names, addresses and e-mail addresses belonging to millions of Americans. In that case, the hacker was able to get at the records largely because of a failure by Acxiom to establish proper access controls, Howard said. Though the incident was recorded as an external hack, in reality, it was enabled by an internal error, he said.

When it comes to just the volume of compromised records, though, external hackers accounted for some 45% of breached records, while 27% came from internal errors and 28% remained unattributed, Howard said. A total of about 1.9 billion records were compromised in the incidents that were studied.

The university study also showed that there were more reported incidents in 2005 and 2006 -- 424 -- than the previous 25 years combined, when there were 126. But that's likely because of breach-disclosure laws in California and several other states that require companies to notify consumers of incidents involving the potential compromise of their data, he said.

Another key finding of the report is the fact that colleges and universities account for an increasing percentage of all reported incidents, while the health sector by far reported the fewest incidents, he said.

"Certainly, we find that data breaches are often the result of negligence" on the part of companies managing the data, said Avivah Litan, an analyst at Stamford, Conn.-based Gartner Inc. Examples include not changing passwords or using weak passwords, along with a tendency on the part of individuals to leave log files or sensitive data lying around in unprotected fashion, she said.

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