NEW YORK--(BUSINESS WIRE)--Cyber-attacks are becoming more prevalent at U.S. colleges and universities and media attention surrounding an attack poses reputational risk that could push down enrollment, according to Fitch Ratings.
Smaller private institutions with less resources and more operating challenges may have weaker security systems in place and a less prepared management team. Larger institutions with greater resources and strong management practices are likely better prepared to deal with or prevent them, due to the scale of their operations. Both large and small institutions could be more at risk if such an event were to occur given the sector's public profile and the negative publicity surrounding this type of event.
Institutions with insurance policies that specifically cover cyber-attacks in addition to traditional insurance may be better prepared to deal with an attack. However, preventative and post-event costs could include fraudulent charges not fully offset by insurance.
Colleges and universities are likely to remain attractive to hackers as enrollment and financial aid applications include students' and their parents' personal information, including their addresses, birth dates, social security numbers and proof of income. Further, online portals for tuition and other payments are sometimes linked to credit card and bank account information and passwords. We believe the security of systems and the investment in technology, in addition to the awareness of management, should be at the forefront of an institution's agenda.
The pace and size of breaches may also be rising. There have been approximately 29 data breaches at educational institutions since 2005. Before 2010, they were relatively small, with losses in the range of 100,000 records. But in 2013, Maricopa County Community College District lost 2.49 million records, and so far this year, data breaches have occurred at four colleges and universities.
Additional information is available on www.fitchratings.com.
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