From Microsoft to the Red Cross, cybercrime has been a nuisance for a variety of organizations. It doesn’t matter if you run a large corporation or a small nonprofit—no organization is safe from a cyberattack. If a cyberattack is successful, it can be rather expensive for the affected company. But what is the actual cost of a data breach?
In this blog, we’re going to cover:
- What’s the cost of a data breach
- What’s behind the cost
- Indirect costs of a data breach
- What’s driving these cyberattacks
- How to avoid cyberattacks
What’s the Cost of a Data Breach?
Among the many problems businesses face today, cybercrime is one of the fastest growing threats. While you may think this is something that only concerns large corporations, the truth is hackers are just as likely to target small organizations. The reason why cybercrime affects all businesses is because your company possesses a lot of data. Gaining access to this information can be highly beneficial for the attacker.
Regardless of the industry you’re in, your organization has an obligation to protect the data of your clients as well as your own business. With the high prevalence of cybercrime these days, it’s never been more important to be aware of the consequences of a data breach. Part of being aware of the consequences is understanding the real cost of a data breach.
According to a joint study from IBM and the Ponemon Institute, the average cost of a cyberattack reached $4.24 million in 2021. That’s a 10% increase from the $3.86 million reported back in 2019. And forecasts project that the global cost of a data breach may reach $10.5 trillion by 2025. This begs the question, why are data breaches so expensive?
What’s Behind the Cost of a Data Breach?
The cost of a data breach is often attributed to costs related to cybersecurity regulatory fines. While regulatory fines do contribute to the overall cost, it’s only one of the many factors at play here. For example, when you experience a cyberattack, you’re likely going to have to pay for forensic services to discover where the attack originated. Another cost may include legal fines if your customers were affected by the attack. However, the actual cost of a data breach isn’t solely financial.
The Indirect Costs of a Data Breach
Although financial loss is a serious consequence, it would be wrong to only look at the cost of a data breach from a monetary perspective. When your systems are invaded by an outside threat, it can lead to other problems for your business, such as:
- Reputational Damage: While the reputational cost of a data breach is not as quantifiable as financial loss, reputational damage can harm your business. If your organization fails to stop a security breach, it could make your customers lose their trust in your organization. Lost trust could cause your customers and partners to flee to your competitors.
- Legal Consequences: Data protection and privacy laws require your business to maintain the security of all personal data you hold for your customers as well as your staff. If you fail to protect this information, whether accidentally or deliberately, your business could face sanctions in addition to regulatory fines.
- Data Damage: Data is immensely important to your business, as it informs your strategies and decisions. A successful cyberattack could damage or even completely delete your information. Losing valuable data might set your company back weeks, months, or even years.
Is There Something Driving These Attacks?
There is no single reason for why your company may be attacked by a hacker, but there are a few factors that exacerbate the problem. One of these factors has been the pandemic. After the beginning of the pandemic, there was a lot of information being thrown around. Cybercriminals saw this as an opportunity, and phishing scams increased exponentially as a result.
Another factor that has made the problem worse is a lack of cybersecurity and corporate behavior toward attacks. Did you know that 43% of small to medium-sized businesses (SMBs) don’t have a cybersecurity plan? Not having the tools you need for data breach detection makes it easier for cyberattacks to succeed. Additionally, mistakes like paying the ransom after a ransomware attack only encourage criminals to strike again.
How You Can Avoid Paying the Real Cost of a Data Breach
If you want to avoid data breaches, it’s necessary to have strong cybersecurity measures in place. Hiring an IT department for this purpose can be unrealistic for some small businesses. If you fall under this category, outsourcing your IT provides all the benefits of an internal IT department at a fraction of the price.
Other ways you can avoid the cost of a data breach include:
- Train Your Employees: Take the time to educate your staff on the dangers of cyberthreats. Also teach them how to spot suspicious activity. If you partner with a managed service provider (MSP), they can even simulate cyberattacks that require your employees to put what they’ve learned to the test.
- Implement Cybersecurity Tools: An MSP can provide your network with enterprise-level cybersecurity tools capable of thwarting a variety of cyberattacks.
- Configure Your Filters: A lot of cyberthreats use email as an agent of attack. Configure your anti-spam filters to flag file types commonly used to hide ransomware like .exe and .vbs.
- Create Backups: Always back up your data and do it regularly. If you end up experiencing a cyberattack, you can use your backup data to maintain your operations.
