1. Scott & Scott, LLPPage 1 Business Impact of a Data Breach Research Sponsored by Scott & Scott, LLP Julie Machal-Fulks May 23, 2007

2. Scott & Scott, LLPPage 2 Survey Topics Are organizations prepared to respond to breaches and what remedial actions do they consider the most important? Do organizations measure the cost related to breaches? What causes data breaches? How have breaches affected organizations’ strategies for preventing breaches? Are there differences in the way pre-breach and post- breach organizations approach prevention and detection of data breaches?

3. Scott & Scott, LLPPage 3 The sample of 702 IT security practitioners Sample responseFreq.Pct% Total sampling frame11762100.0% Email invitations sent1105394.0% Bounce back8977.6% Total surveys received7806.6% Rejected surveys780.7% Final sample7026.0%

4. Scott & Scott, LLPPage 4 85% of respondents’ companies experienced a breach or security incident

5. Scott & Scott, LLPPage 5 42% of data breaches were caused by missing devices such as laptop computers

6. Scott & Scott, LLPPage 6 Are organizations failing to employ remedial measures to reduce the risk of future breaches?

7. Scott & Scott, LLPPage 7 57% did not have an incident response plan in place when the breach happened

8. Scott & Scott, LLPPage 8 Typical immediate response: prompt notification by letter

9. Scott & Scott, LLPPage 9 81% of respondents have not calculated costs associated with breaches

10. Scott & Scott, LLPPage 10 Notification strategy: 37% notify everyone, regardless of potential harm

11. Scott & Scott, LLPPage 11 Majority of respondents do not believe that breach victims suffer monetary damages

12. Scott & Scott, LLPPage 12 Is management supportive of efforts to prevent data breaches?

13. Scott & Scott, LLPPage 13 Breaches may impact spending on IT security

14. Scott & Scott, LLPPage 14 Breaches may change expectations about IT spending

15. Scott & Scott, LLPPage 15 Questions? Robert J. Scott Julie Machal-Fulks Scott & Scott, LLP 2200 Ross Avenue, Suite 5350E Dallas, Texas 75201 800-596-6176 www.scottandscottllp.com