This Just In ...
The massive November 2018 security breach at Marriott International Inc. has affected 500 million customers due to hacks that began in 2014.
The international risk modeling and data analytics firm AIR Worldwide estimates that the direct cyber incident losses for the Marriott breach will be between $200-600 million. The estimate includes first- and third-party losses directly related to the security breach, including notification costs, forensics, credit monitoring, replacement of credit cards, setting up a call center, and any liability covered under an affirmative cyber policy.
The large variance in the estimate reflects uncertainty about just how much data was stolen. Even though credit card data was stolen, it was encrypted. But its unknown whether the encryption key itself was also stolen. Also, some of the 500 million stolen records may be duplicates.
On the other hand, Bloomberg Intelligence Analysts warned of losses as high as $1 billion, including potential fines from the General Data Protection Regulation of the European Economic Community.
Scott Stransky, assistant vice president and director of emerging risk modeling at AIR, said that though this breach is uniquely large, it's not unprecedented. Hotels are common targets of hackers.
Marriott has said that the breach will not affect its long-term financial health and that it has insurance for much of the loss and is working with its carriers to assess coverage. The various policies involved likely include directors & officers liability, business interruption with cyber liability endorsements and other coverages including reputational loss and decrease of stock price.
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