After reading several and articles and visiting several websites, I found this article on "The Carrot and Stick of Data Breaches". This article explains there must be punishment and rewards for security and data breaches. An example is organization not taking basic steps to protect their client client's personal information should be liable for the data breach.
The companies have not put in place adequate security to protect the customer's data. It explains that 93% of data breaches can be prevented by protecting systems form known bugs, properly training employees on phishing email and password targeting, and data encryption.
The article suggests increasing accountability in security that the carrot and stick approach is used. The carrot approach is to give incentives to employees or organizations. The organization should e able to provide security signals to the market so that they can benefit from the increased security levels. The stick will hold organizations accountable for client's data and should be responsible for the cost of the breach.
Another example an article on Vista taking the carrot and stick approach to security. Visa was encouraging merchants to stop storing credit card data because it stored sensitive customer information which allows fraudster to steal credit card information and duplicate cards.
Visa provided positive and negative incentives to the merchant banks and card accepting vendors to ensure they were properly protecting data. Another example of carrot and stick approach.
References
Evers, J. (2006, December 13). Visa takes carrot-and-stick approach to security
Kende, M. (2016, December 27). The carrot and stick of data breaches.
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