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The True Cost of a Data Breach in 2022

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Escalating Cyberattacks Impact More Than A Company’s Bottom-Line

 Data breaches cost organizations millions of dollars: The average price tag is up 10% from 2020 to $4.24 million across all industries and up 29.5% to $9.23 million in healthcare — and the fallout is even more damaging than the initial losses. The remediation costs triple the initial damages, and legal repercussions can add millions to the total bill.

Why Do Data Breaches Happen?

 Despite advances in cybersecurity, it’s far too easy to steal data: Human error accounts for 85% of data breaches (often the result of a mere phishing email). Malware, application vulnerabilities, and stolen credentials or devices make up the difference.

Data breaches aim to steal confidential information — mostly for financial gain and sometimes just for the thrill of exposing organizations. Once an intruder has access to sensitive data, they may hold data for ransom or sell passwords and customers’ PII on the Dark Web.

What Is the Cost of a Data Breach?

According to the IBM Security Cost of a Data Breach Report 2021, the average cost of a data breach in 2022 is $4.24 million. But where do these totals even come from? And what other damage is done?

The IBM report breaks down the totals into four distinct categories:

1. Lost Business Costs

$1.59 million is the average cost of lost business — including increased customer turnover, lost revenue from downtime, damaged reputation, and lost opportunities.

2. Detection and Escalation

$1.24 million is attributed to the work that goes into detecting a breach and dealing with the immediate fallout. Specifically, this price tag includes the cost of investigation, auditing, crisis management, and internal communications.

3. Notification

$270,000 is the average cost of reporting the breach to customers, regulators, and outside experts.

4. Post-Breach Response

The post-breach response drains an additional $1.14 million from the bank. Organizations face increased customer service demands, regulatory fines, and legal expenditures in the weeks, months, and even years following an attack.

Additional Costs: The True Consequence of a Data Breach

While the average cost of a data breach is unsettling enough, there are additional costs to consider. Variables such as time to discovery, the number of records exposed, whether or not ransomware is a part of the attack, major legal fallouts, and ongoing losses attributed to a tarnished reputation can shutter a business overnight.

  • Time to Discovery: It takes 287 days for most victims to identify and contain a data breach. The longer an intruder has access to data, the more records they can steal.

  • The Number of Records Exposed: The average stolen customer record costs organizations $161. A mega breach of more than 50 million records costs 100x more than the average data breach — rapidly approaching half a billion dollars.

  • Ransomware Costs: A ransomware breach adds 10% to the total bill increasing the average cost of a data breach to $4.62 million.

  • Legal Repercussions: The average bill for a data breach goes up to $5.65 million at organizations with a high level of compliance failures, compared to $3.35 million where compliance failures were low. Lawsuits over data breaches are increasingly common, so tightening up security and following protocol is not just smart — it’s necessary.

  • Reputation: Can you put a price tag on reputation? A company’s brand and reputation drive business as much as its products and innovations. 83% of US consumers claim they keep their distance from a company that has suffered a data breach — and an additional 21% say they abandon it altogether.

How can I prevent a data breach?

As we’re seeing ransoms skyrocketing, remediation draining revenue, and public opinion becoming increasingly unforgiving, the business landscape will soon become uninhabitable for the unprepared. Educating your staff and overseeing compliance with cybersecurity protocols is critical to your business’s survival. Start with the following:

  • Limit access to valuable and vulnerable data: The fewer people with credentials, the less chance those credentials will be compromised.

  • Keep software up to date: Take inventory of each system and the updates they require. Create a routine to stay consistent.

  • Destroy before disposal: Before confidential materials are thrown away, be sure they’re thoroughly destroyed. Shred papers and permanently delete data from devices like laptops, phones, and old hard drives.

  • Educate employees on cybersecurity best practices: Use unique passwords, do not share credentials with anyone, report suspicious emails, and do not use company devices for personal use. All it takes for a malicious actor to access company software is one innocent-looking link in an email.

  • Create an incident response plan: The more you drill, the faster your response.

Having a playbook in place in the event of a breach can help you act quickly, minimize damage, avoid unnecessary fines, and save millions of dollars. Take care of your security systems so that they take care of you — and your revenue.

Read More: What You Need to Do After a Data Breach

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How the U.S. Is Raising the Bar on Cybersecurity

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“You have the power, the capacity, and the responsibility to raise the bar on cybersecurity,” President Joe Biden told a room full of executives and cabinet members in August. With news of spyware exposing sensitive government documents in the Homeland Security and Treasury departments — and hackers disrupting critical infrastructure, including food supply and the oil industry — leaders everywhere are using their power to level-up cybersecurity innovation, investments, and leadership.

The State of Cybersecurity: A Brief Overview

Biden’s remarks followed a series of well-publicized attacks in late 2020 and 2021 — including interference with the 2020 elections; the SolarWinds attack; a zero-day attack at Microsoft; ransomware affecting the Colonial Pipeline Company; and a separate ransomware incident that shut down large meat processing plants at JBS.

Cybersecurity pros and solutions often remain just one step ahead of the bad guys in the ever evolving race to secure bigger, more interconnected attack surfaces. But is one step ahead far enough? Alongside the well-publicized attacks mentioned above, there’s been a 600% increase in lesser-known cyber attacks over the past few years — and they’ve been far too successful. According to Canalys, bad actors seized more records in 2020 than in the last 15 years combined.

 

The Game is Changing. We Need More Players.

Imagine a nationstate exponentially increasing its landmass without a large enough army to secure its borders. This is the challenge facing the digital world. More people are connected than ever before, yet the digital landscape lacks the cybersecurity workforce, tools, and laws to keep up with rising demand. In fact, according to a recent report by (ISC)², nearly three million cybersecurity jobs are currently vacant. The cybersecurity industry simply lacks qualified candidates to fill important roles.

Despite these gaps in cybersecurity, more people around the globe are moving their personal, social, and business lives online. According to McKinsey & Company, “an estimated 127 new devices connect to the Internet every second.” Innovations in technology are enabling individuals and businesses across every sector to go digital at record speed. If anyone was lagging behind prior to 2019, they likely joined the cybersphere during the Covid-19 pandemic.

  

Outcomes: Raising the Bar

When the president asks, people listen — including some of the most powerful players in the tech industry. Here’s how tech execs and government leaders responded to the president’s request to raise the bar on cybersecurity, as reported by Reuters:

  • New Guidelines: The White House and the National Institute of Standards and Technology (NIST) will work collaboratively with tech industry leaders to come up with new guidelines for securing software and technological innovations.

  • Investments From Large Companies: Industry leaders committed financial and service-based pledges to raise the bar:

  • Amazon will train individuals on cybersecurity free-of-charge.

  • Microsoft will invest $20 billion in cybersecurity over the next 5 years and help local, state, and federal governmental agencies keep their systems and networks secure.

  • Google will spend $10 billion on cybersecurity over the next 5 years and offer cybersecurity skills training to over 100,000 people.

  • IBM will train 150,000 people on cybersecurity, and focus on diversity and inclusion in the tech industry.

  • New Laws: Congress will work to create new laws that regulate the tech world, including new consumer protection laws and policy to regulate cybersecurity insurance companies.

CodeHunter is joining the collective effort to raise the bar on cybersecurity by making the most powerful malware detection tool ever created. Plus, CodeHunter’s groundbreaking innovation was designed specifically to help address the talent shortage — you can easily compensate for cybersecurity resource constraints by using CodeHunter to automate your malware hunting and reverse-engineering efforts.