Deceptions Everywhere ®

Insights on threat and cyber risk trends, use cases for deception technology
and strategies for combatting targeted attacks

How to Calculate the Actual Cost of Data Breaches

Posted by Ofer Israeli on Nov 16, 2015 4:43:00 AM


Recently, it feels as if security breaches are running rampant throughout the business world – and it’s costing companies billions.

The Target debacle will end up costing over $1 billion, and Home Depot is expected to pay $10 billion over the next decade to compensate for the 56 million accounts that were hacked.

Not convinced yet? Sony Pictures may eclipse the $1 billion mark and Ashley Madison is facing multiple lawsuits seeking damages in the hundreds of millions of dollars - as nearly 40 million membership accounts were hacked.

Tweet: How certain are you that your organization is protected from high-profile #CyberAttacks?How certain are you that your organization is protected from high-profile cyber attacks?

Smart companies are waking up to the fact that no one's immune to cyber threats and data breaches. The impact of such incidents on the bottom line is far too large to overlook.

Cutting security budgets to save thousands of dollars isn’t worthwhile if it ultimately leads to a hack resulting in major damages.

C-level executives and business leaders need to understand the cost of a data breach to help guide their investments in security defense systems.

Fast Facts: The Real Costs of a Data Breach

Extreme cases – Target, Home Depot, Sony and Ashley Madison – serve as a warning of the potential dangers of the current cyber threat landscape.



To offer more perspective on the cost of a data breach, here are a few highlights from the2015 Cost of Data Breach Study: Global Analysis, published by IBM and Ponemon: 

  • The average total cost of a security breach in 2015 reached $3.79 million, a 23% increase over the last two years

  • The average per-record cost of a security breach is now $154 – a 6% increase from the $145 mark from 2014

  • The industry with the lowest cost per breached record is the public sector ($68), and the industry with the highest is retail ($165)

  • IBM and Ponemon found a linear relationship between the time-to-detect data breach vulnerabilities and the cost to fix it, with financial firms taking roughly 98 days to detect a breach, whereas retailers take about 197 days

  • Gartner estimates that network downtime costs $5,600 per minute – which extrapolates to well over $300K/hr

While the ROI on cybersecurity measures may be difficult to predict, companies should never assume that they won’t be the target of an attack.

< Click Here to Learn How to Calculate Data Breach Costs >

While these numbers represent the hard figures regarding revenue impact, there are also hidden costs of data breaches that can be far more dangerous to your business.

  The Hidden Cost of a Data Breach

With companies such as Target and Home Depot spending billions in resolution costs, these aren’t all directly related the data theft. Tweet: The true costs of a #DataBreach, the ones that bring the total up to the billion-dollar range, are hidden.The true costs of a data breach, the ones that bring the total up to the billion-dollar range, are hidden.

At Target, the direct costs of the data breach were $61 million, $44 million of which were covered by insurance. This included compensating the card networks for their losses and covering expenses related to reissuing cards, lawsuits, government investigations and enforcement proceedings.

Educated consumers will only do business with companies they trust. When companies lose their credit card information or personal details in a data breach, that trust is broken.

While many companies focus on more quantifiable metrics, regaining trust is the costliest part of resolution management.

If you don’t want your company fueling the $300 billion the U.S. economy loses to cyber crime each year, you need to understand the risks and warning signs of data breaches.

With a concrete understanding of the costs you could be facing, you can invest in a more effective strategy to defend against insidious cyber attacks. 

< Guide: How to Protect Your Shared Drives from Data Breaches >


Recommended Reading for You: 


Topics: Data Breach, Cybersecurity, Cost of data breach, how to calculate data breach cost, data breach costs to business, Target data breach, security breach cost

Ofer Israeli

Written by Ofer Israeli

Founder and CEO, Illusive Networks

Stay up to date!