It is important for small business owners to protect confidential data proactively because the average cost of a data breach is huge. And in the worst case scenario, data breach incidents can even force businesses out of business. In this post, you will learn – what are the costs of a data breach and what you can do to reduce costs.
Let’s check:
Where Do Data Breach Reports Come From?
Some companies prepare data breach reports each year to help understand the various aspects of data breach incidents.
Here are three of the top known resources for data breach reports:
- IBM Costs a Data Breach Report
Sponsored by IBM Security, The Cost of Data Breach Report includes research conducted independently by the Ponemon Institute every year. In this report, the agency examines companies affected by data breaches around the world.
- Verizon Data Breach Investigation Report
Each year, the Verizon Data Breach Investigations Report describes data-driven, real-world insights into what’s happening to companies in regards to cybercrime. This data breach study provides many useful insights to strengthen your online security.
- ForgeRock Consumer Identity Breach Report
If you want to take a look at how data breaches affect consumers across a variety of reasons and industries, the ForgeRock Consumer Identity Breach Report is the right resource. The report also provides details on how one can strengthen their internet security to stay safe from attacks.
Data Breach Costs US Key Findings
Data breaches often have a long-term impact on businesses. In addition to data loss costs and regulatory fines, data breaches also have indirect costs, including employee turnover, lost revenue, customer turnover, negative search results, etc.
The following are the main consequences related to the cost of a data breach:
This is the average cost of a data breach.
The average global cost of data breaches reached $4.35 million, according to IBM’s data breach report. This marks an all-time high, representing an increase of 2.6% over the previous year.
If you’re wondering about the total cost of a data breach in the US, it stands at $9.44 million. This figure represents the highest estimate of the cost of violations worldwide.
These are the most expensive types of data breaches.
Want to find out the average cost of a data breach for different industries? Check out the data from the IBM report below:
- Healthcare industry (10.10 million)
- Financial industry (5.97 million)
- Pharmaceuticals ($5.01 million)
- Technology ($4.97 million)
The healthcare industry has the highest cost of a data breach, and the public sector has the lowest cost.
“Smishing” is one of the biggest emerging threats to data breaches
Smishing, a form of phishing that relies on text messages to trick users into revealing sensitive data, is emerging as one of the most important data breach threats.
According to a report by Proofpoint, attacks targeting US users have doubled. In addition, data from the Federal Trade Commission (FTC) revealed that 378,119 SMS-related fraud reports were filed during that period.
Double-checking messages that create a sense of urgency or fear, avoiding clicking on suspicious links, and contacting banks and other authorities directly about account-related issues are some effective ways to protect against smishing attacks.
These industries are prime data breach targets.
Here are the industries that are the top data breach victims, according to the Verizon Data Breach Investigations report:
- Finance
- The expert
- Healthcare industry
- Public administration
Why paying a ransom is not always a good idea.
After malicious actors have captured data in a ransomware attack, business owners often consider paying the ransom. In fact, 53% of companies choose to pay the ransom. However, paying money is not always a good option. This is because paying threat actors encourages them to target more businesses and there is no guarantee that you will get full access to your data after paying.
Uber paid hackers $100,000 to remove the compromised data but ended up spending $148 million in the final settlement.
These top factors have contributed significantly to the cost of data breaches.
If the breach goes undetected for a long time, the threat actors will have to extract/encrypt the data. It is therefore not surprising that a shorter data breach lifecycle (the time elapsed between the first discovery of a breach and its containment) correlates with lower costs of a data breach.
A data breach lifecycle of 200 days or less was associated with an average global cost of $3.74 million. However, when the lifecycle of a breach extends beyond 200 days, the average cost rises to $4.86 million.
This is the cost of a data breach per record.
IBM’s data breach report shows that the average cost of a data breach per record is $164 globally, marking a 1.2% increase from last year.
Remote operation is vulnerable to data breaches.
Having remote workers increases the cost of a data breach. According to IBM’s data breach report, companies with more than 80% remote workers pay $5.10 million in average data breach costs.
This is a typical time in the life cycle of a breach.
The IBM report reveals that the average lifespan of a data breach lasted 277 days. Last year, it took an average of 212 days to identify a breach and 75 days to contain it, resulting in a lifecycle of 287 days. The longer a data breach goes on, the higher your associated costs tend to be.
Small businesses are particularly affected by data breaches.
Small businesses are most affected by data breaches. In fact, 28% of data breaches involved small businesses, according to the DBIR. A data breach incident can lead to higher costs for products and services. According to a report by IBM, 60% of organizations have increased costs due to violations.
11. Want to reduce the cost of a data breach? Do this.
Using security AI and automation, having an incident response team, focusing on risks, and adopting a zero-trust model can reduce the cost of a data breach.
Here are the findings from IBM’s report on the cost of data breaches to prove:
- Fully integrated security AI and automation reduced the average cost of a data breach by 65%
- Organizations with incident response capabilities were able to reduce the overall cost of a data breach by 58%
- Companies that prioritize risks, threats, and impacts using risk-adjustment strategies saw an average data breach cost that was 48% lower.
- Companies that adopted the zero-trust model paid 20% less than the average cost of a data breach
The conclusion
Now that you know – what are the costs of a data breach? It’s time to strengthen your data security to protect customer data and any other types of sensitive data from any potential data breach.
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