With the US retail market reeling from a tough end to the holiday season due to security breaches a little news from overseas shows this problem has no borders and is continuing to grow. Headlines are designed to be the hook to the article and occasionally get trumped up, but in this case the numbers tell the story without need to exaggerate, 40% of the population of South Korea, ~20 million people, had their personal data stolen or otherwise compromised via a weak link in the security chain. Over the course of ~18 months an employee was able to repeatedly connect an external drive and download proprietary information resulting in the largest data breach in the history of the country.
The result of that South Korean breach - reduced revenue and increased costs. Three companies are being forced to suspend operations for 3 months. Add up the cost of reissuing all those compromised cards along with the rest of the customer base now with a legitimate reason to demand a new card - estimates vary from a few dollars to $15 per card reissued. Combine that with the impact upon your customer services organization when every customer calls to complain?
How would your corporate earnings look if you removed Q1 from the revenue pool but kept many of those Q1 associated costs and added some additional ones?