Increasing Costs of Data Breaches
IBM’s newly released annual survey of the financial consequences of data breaches on organizations found that the cost of a data breach has risen 12% over the past five years and that recovery can affect the bottom line for years. Over 50 percent of data breaches in the study resulted from malicious cyberattacks and cost companies $1 million more on average than those originating from accidental causes. System glitches – breaches caused by technology failures not attributable to a human, such as a vulnerability – and human error – caused 25 percent of data breaches. While less common, breaches of more than 1 million records cost companies a projected $42 million in losses; and those of 50 million records are projected to cost companies $388 million. Extensive use of encryption was also found to reduce the total cost of a data breach by $360,000. Data breaches in the U.S. cost $8.19 million-more than double the worldwide average. Lost business is the biggest contributor to data breach costs, accounting for 36 percent of the average total cost. While the financial recovery costs can be quantified, the cost in lost customer loyalty and business is incalculable. The report provides valuable information on how companies can mitigate the costs of data breaches, most notably by mobilizing and testing an standing incident response team. In the study, organizations who were able to detect and contain a breach in less than 200 days spent $1.2 million less on the total cost of a breach.