29th August 2019 | Posted in Cyber Security
According to the data breach report, which is based on in-depth interviews with over 500 companies around the world, data breaches are increasing. Over the past 5 years, the cost of a data breach has risen by 12% to an average of $3.92 million per incident. This was based upon companies who had experienced an incident between July 2018 and April 2019.
The rise in expenses is representative of increased regulatory functions, the multi-year financial impact of breaches and the complexity of resolving cyber-attacks. The research undertaken within the report takes into consideration multiple cost factors, including legal, regulatory, technical, brand equity loss and turnover. The report demonstrates to business leaders, IT professionals, researchers and the IT security industry that although data breaches can be severe, there are mitigating processes to improve security.
The impact of a breach for small to medium-sized businesses can be particularly severe. The study identified that businesses with under 500 employees suffered average losses of more than $2.5million. These higher costs in relation to their size can dramatically hamper their ability to financially recover from a data breach.
Loss of customer trust and reputational damage also has serious financial consequences. The data breach report identified that the average cost of lost business for organisations in the 2019 study was $1.42 million, representing 36% of the total average cost of $3.92 million.
The study also examined the long-term financial impact, revealing that the effects of an incident are felt for years. An average of 67% of data breach costs came within the first year after an incident, 22% accrued in the second year and another 11% accumulated more than two years after a breach.
Businesses can address the issue of data breaches by implementing various mitigating processes, which include: