Welcome to 2018! As we usher in a new year, it can be helpful to take a look back at what occurred over the past 12 months, particularly in terms of cybersecurity. Recognizing what threats are out there and having an accurate understanding of what those risks could potentially cost your business can help you better prepare for and prevent such events from impacting your organization in the future. To gain some insight in this area, we turned to the 2017 Cost of Data Breach Study. Here’s a synopsis of what the study uncovered.
The annual study was conducted by IBM Security and Ponemon Institute, polling 63 U.S. organizations covering 16 different industry sectors. At a glance, the numbers look like the following:
- Average number of breached records: 28,512
- Average total cost of data breach: $7.35 million (up from $7.01 million)
- Increase in total cost of data breach: 5%
- Average cost per lost or stolen record: $225 (up from $221)
- Increase in cost per lost or stolen record: 2%
How is the cost of a data breach calculated?
One of the biggest takeaways from this year’s study was the various factors that are used to calculate the cost of a data breach. Some are obvious, others are more obtuse. Here’s what organizations should take into consideration when evaluating risk:
- Size of breach and/or number of records lost or stolen
- Time required to identify and contain a breach (this number decreasing, thanks in large part to organizations investing in intelligent cybersecurity technologies)
- Detection and escalation costs (including costs associated with investigations, assessments, audits and communication management)
- Post-breach costs, including the expense of notifying victims and appropriate authorities as well as legal expenditures
- Churn rate (loss of customers due to reputational damage following a data breach)
Some of the factors that are recommended for reducing these costs include the use of cybersecurity analytics as well as recruiting and retaining experienced, knowledgeable personnel. Implementing strategies and advanced technologies that can limit the number of records lost or stolen can also help organizations lower costs and mitigate risks.
Additional Noteworthy Findings
Narrowing down the 23-page report, here are a few of the most pertinent findings:
- Both the individual and total average cost of data breaches for an organization have reached record highs
- The amount of abnormal churn (i.e. loss of customers outside of normal course of business) is also on the rise
- Heavily regulated industries experience higher data breach costs (particularly health care and financial services)
- Detection and escalation costs are at a record high
- Malicious or criminal attacks remain the primary cause of data breach (and the most costly)
- Extensive use of mobile platforms has increased cybersecurity risk
- Costs associated with lost business continue to increase
- The use of intelligent cybersecurity analytics reduces the per capita cost of a breach
More money is being spent on indirect cybersecurity costs than direct ones. These costs include the time employees spend on notifications of data breaches as well as incident investigations/remediation efforts.
And, a point that’s so important it’s worth mentioning again: the time it takes to identify and contain a data breach has a tremendous impact on the costs associated with such breaches. In this year’s study, it took an average of 206 days for organizations to detect an incident and another 55 days to contain it. For mean time to identify (MTTI) of fewer than 100 days, the average cost associated was $5.99 million. For MTTI greater than 100 days, however, that cost increases significantly to $8.70 million. Likewise, costs associated with mean time to contain (MTTC) rose from $5.87 million (less than 30 days) to $8.83 million (30 days or more).
The overall conclusion from these facts and figures is that cybersecurity continues to be an incredibly costly risk to organizations. To mitigate this risk (and the hefty costs associated with it), business leaders must take a proactive approach, developing strategies and leveraging advanced incident response technology to stay a step ahead of hackers. Intelligent automation powered by AI and machine learning can provide this level of security.