Recently, it feels as if security breaches are running rampant throughout the business world – and it’s costing companies billions.
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.
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.
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 the“2015 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.
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. 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.
Recommended Reading for You:
- The Anatomy of a Data Breach
- 5 Steps to Cyber Security Risk Assessment
- The Quick Guide to Crafting a Data Breach Response Strategy