What is the Cost of a Data Security Breach?

So far, the worldwide average cost of data breaches in 2020 is $3.86 million, according to the Ponemon Institute’s report. That is a staggering number.

While the overall worldwide number is down 1.5% from $3.92 million in 2019, the United States’ number is up to $8.64 million from 2019’s figure of $8.19 million. Ponemon and IBM, which have sponsored the report for the last five years, suggest that organizations that lacked security automation and incident response mechanisms experienced a higher cost of remediation.

What is clear from the statistics is that data breaches are expensive. The average time to identify and contain a data breach, or the “breach lifecycle,” was 280 days in 2020. Speed of containment can significantly impact breach costs, which can linger for years after the incident.

Stopping and tracking these breaches is a top concern for many organizations.

Remote Work and Data Breaches

Many organizations are concerned about the unintended consequences of cybersecurity with a remote workforce. When the pandemic started, many companies weren’t prepared to support a fully remote staff and security often fell behind equipment and collaboration tools.

However, it’s been top of mind lately as companies look for ways to store their data so it’s easily accessible to a remote workforce.

Seventy percent of those surveyed in the Ponemon Institute’s report said that remote work would increase the risk and cost of a data breach. The report suggests that remote work impact on data breaches is around $137,000.

Data Breach by Industry

The cost of data breaches and the aftermath of the cleanup varies by industry.

Healthcare organizations have had the highest costs associated with a data breach. This is a trend that has continued for the past 10 years. The cost of healthcare data breaches in 2020 is $7.1 million thus far.

The second industry hit the hardest was the energy industry at $6.39 million on average.

Healthcare and energy industries were among the three industries that saw an increase in the total cost of a breach in 2020. The other industry was retail, which saw a 9.2% increase.

The enormous costs associated with data breaches in healthcare and energy could be contributed to the industries’ higher regulatory standards. The more damaging the data breach, the more likely the organization is to lose business.

Types of Data Breached

From the different types of data breached, the most common type of information was organizations’ personally identifiable information.

80% of the organizations that were compromised stated that breached data cost their businesses $150 per compromised record and even more ($175) when that data was breached via a malicious attack.

Prevention and Recovery of Data Breaches

Several things contribute to the expensiveness of data breaches. Some of the factors that amplified costs included:

  • Meeting compliance issues
  • Lack of cybersecurity resources
  • Overly complex security systems with little visibility

Strategies that organizations have implemented as a result are:

  • Curating an incident response team
  • Establishing an incident response plan

Reports indicate having both in place could save an organization $1.23 million per breach.

Another suggested technique is to deploy security automation technologies.

With the cost of data breaches in the millions, investing in tools to prevent them is worth the cost. And with the threat landscape continuing to evolve, it is an investment all organizations must make moving forward.

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