Data theft cost Sony as much as earthquake

I remember some meetings in my past life, when I had to justify expenditure on information to my boss – a chartered accountant with not too much in-depth knowledge of IT. This was in the late 1990’s. Of course, technology has moved on dramatically since then, but I’d be fairly sure that any accountants today would still be questioning the costs if IT/IS infrastructure and software.  And today, it is not only the cost of the equipment that needs to be considered, it is the cost of the information held by companies. This is a very difficult thing to cost, but the problems at Sony in recent months gives some idea. In May 2011, the Los Angeles Times wrote about the cost of the first hacker attack on Sony (there was another one in June 2011). The article reports a cost of  $171 million, which is believe it or not is nearly as much as the impact of the Japanese earthquake/tsunami earlier that year on the companies profit ($208m). I’m not sure what the hackers did to break in to Sony’s systems, but I bet it would have cost a lot less than $171 million to make their systems hacker-proof. And I’d also bet the hacker’s would be happy to repair the damage for a lot less than $171 million too!


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About martinjquinn

I am an accounting academic, accountant and author based near Dublin, Ireland.

5 responses to “Data theft cost Sony as much as earthquake”

  1. lecturersnotes says :

    Sony invested quite a lot in hacker-proofing their systems now. Of course, Sony is not the only one being hacked – in Austria, Anonymous (the data swashbucklers of the internet) has hacked into databases of the police as well as plundered information about hospital patients.

    Sony was just one of the first big guns to get keelhauled by Anonymous.

  2. johnadonovan says :

    Just a side comment if I may in relation to your last line “I’m not sure what the hackers did to break in to Sony’s systems, but I bet it would have cost a lot less than $171 million to make their systems hacker-proof. And I’d also bet the hacker’s would be happy to repair the damage for a lot less than $171 million too”.

    Is this not a little contradictory to the first statement regarding justifying costs to your old boss who is a Chartered Accountant. Surely his/her job entailed monitoring the costs and verifying whether or not they were worth the money. If perhaps the cost was astronomical back then on the IT infrastructure it may not have provided a value added service to the company or perhaps a more appropriate solution could have been made. (not saying for one second that your choice was not appropriate) but I get the feeling you didn’t or do not like Chartered Accountants. Would I be correct?

    Also just to mention, I think your blog is fantastic and I hope to see more and more great insights and perhaps more out there doing it.

    • martinjquinn says :

      Hi John, thanks for the comment. No I was not having a go at chartered accountants. The person in question was a bit older and more suspect of any technology changes as it was usually so hard to see the end game or return in money terms. He just happened to be a CA, the lack of knowledge of IT/his age was the real point – although I did not state his age. Thanks for your appreciation of my blog too. It’s always good to hear what people think.

      • johnadonovan says :

        Good to hear Martin. I am training to be a chartered accountant as you might tell but I hope to do a lot of research into Management accounting as I progress as I find it one of the more interesting areas within the overall framework of accountancy based topics. Would you be open to an email instead of on this forum to questions regarding the profession etc? Although for discussions on your topics I shall post here to promote and facilitate open debate and commentary.

        In relation to the blog, you are most welcome. I love discussing topics such as the ones you post on and feel that more things like this should be done such as open debates with students of different colleges and globally. On the IT side of things, with programs such as Skype etc Students could potentially grow their learning of Accountancy and indeed other subjects with video conference type exchanges etc. Just a thought.

  3. martinjquinn says :

    John, on the About page there is a link to a contact form. You can use this to contact me

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