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IT IS BOUND TO HAPPEN:Managing Losses for the Inevitable Data Breach 1I. IntroductionIt is bound to happen. In fact it may already have happened and you do not even knowit. Reports of significant data breaches are becoming everyday news, and the troublingpart is that it is estimated that approximately twenty-five percent of breaches goundetected.Myriad studies have shown that the number of data breaches continues to rise. In 2013,33 percent of respondents to the Ponemon study reported that their company had adata breach. 2In 2014, that number had increased to 43 percent. Verizon’s 2014 DataBreach Investigations Report found 63,000 confirmed security incidents for the 2014reporting period. 3 In the first five months of 2014, there were 311 confirmed data breachevents with 8.5 million records exposed. 4The actual number of breaches is likely muchhigher since many breaches go unreported.If your company or firm has not yet suffered a data breach, your days are probablynumbered. Cyber risks vaulted to number eight on the top ten global business risk in1 Materials prepared by Elaine Moss of Brown & James, P.C., St. Louis, MO, and Lisa Mickley of Hall &Evans, LLC, Denver, CO.2 Ponemon Institute, 2014 Cost of Data Breach Study: Global Analysis,http://public.dhe.ibm.com/common/ssi/ecm/se/en/sel03027usen/SEL03027USEN.PDF.3 Www.verizonenterprise.com/DBIR/2014.4 Hartwig, Robert P., Cyber Risks: The Growing Threat, Insurance Information Institute.http://www.iii.org/white-paper/cyber-risks-the-growing-threat-062714 (last visited January12, 2015).