In Spite of Terrorist Threats, Spending on Security Lagging

A new study by The Conference Board shows that, in spite of the continued threat of terrorist violence, most companies are spending approximately the same on security that they spent prior to September 11, 2001.

According to a survey of more than 330 business security directors, risk managers, and information technology security officers, there has been only a 4% median increase in security spending in the past two years. At the other end of the spectrum, only 7% of companies surveyed have increased their security spending by 50% or more.

"While nobody knows how much security spending is enough, there are legitimate concerns about corporate vulnerability," said Tom Cavanaugh, a security expert at The Conference Board and author of the study.

Most companies surveyed are relying on increased spending on insurance and risk management to confront their security needs rather than taking additional steps to guard against terrorist attacks. And the study suggests that the increase in spending on insurance may well be a result of increases in fees for existing policies rather than a cost associated with additional insurance coverage.

The study also shows that measurable increases in security spending have occurred in New York, Boston, and other cities in the northeast, whereas security spending typically has increased less than 3% in other parts of the country.

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