Home SecurityData Breach What is the cost of a data breach?

What is the cost of a data breach?

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The cost of a data breach is not easy to define, but as more organizations fall victim to attacks and exposures, the potential financial repercussions are becoming clearer. For modern businesses of all shapes and sizes, the monetary impact of suffering a data breach is substantial. IBM’s latest Cost of a Data Breach report discovered that, in 2022, the average cost of a data breach globally reached an all-time high of $4.35 million. This figure represents a 2.6% increase from the previous year and a 12.7% rise from 2020.

Factors such as incident type and severity, regulatory standards, company size, sector, and region can significantly affect how much a data breach could costs a business, but all organizations must carefully assess and prepare for the monetary hits that could be just around the corner should they fall victim. Some are potentially far more damaging (and less obvious) than others.

Factors impact data breach costs

IBM’s 2022 report cited several contributing components that affect data breach costs. For example, the average data breach in healthcare increased by nearly $1 million in 2022 to reach $10.10 million, the most expensive for any industry, while financial organizations recorded the second highest costs, averaging $5.97 million. The average cost of a data breach for critical infrastructure organizations generally was $4.82 million — $1 million more than the average cost for organizations in other industries. The top five countries and regions for the highest average cost of a data breach were the U.S. at $9.44 million, the Middle East at $7.46 million, Canada at $5.64 million, the UK at $5.05 million and Germany at $4.85 million.

In terms of security technology and preparedness, breaches at organizations with fully deployed security AI and automation cost $3.05 million less than breaches at organizations with no security AI and automation deployed. This 65.2% difference represented the largest cost savings in the study. Organizations that do not employ a zero-trust approach to security typically pay an average of $1 million more in breach costs compared to those that do, while businesses with an incident response team that tests its response plan saw an average of $2.66 million lower breach costs than organizations without an IR team and that don’t test plans.

When remote working was a factor in causing a breach, costs were an average of almost $1 million greater than in breaches where remote working wasn’t a factor, IBM’s report found. Meanwhile, the average cost of a phishing attack in 2022 was calculated to be $4.91 million compared to $4.54 million for ransomware and $4.50 million for stolen or compromised credentials.

Reputational damage still one of the biggest costs of a data breach

It’s an old cliché, but you really can’t put a dollar on customer trust, and a damaged reputation remains one of the most significant data breach costs for organizations in 2022, experts agree. “Ultimately, customer trust is very easy to break, and very difficult to build,” Allie Mellen, senior analyst at Forrester, tells CSO.

Copyright © 2022 IDG Communications, Inc.

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