You may have a rough (and terrifying) idea of what happens if you have a data breach, but if you’ve never experienced one first-hand, you likely don’t know just how much a breach can cost or how far-reaching the effects of one can be. There’s a reason some companies have been brought to their knees by a single breach—they’re incredibly expensive. Even if you have cybersecurity insurance, you may find that the particular nature of the breach or one small security vulnerability you neglected to address triggers an exclusion clause. That leaves you to face the entire cost of the breach yourself.
How much will this be? Every breach is different, but it’s safe to say that it’s going to be expensive. Even if you have precautions, insurance, and business contingency plans in place, you may not walk away without losing some money. If this hasn’t scared you off yet, let’s take a look at just how costly a data breach can be so you understand why working with a company like Wooden Spoon is in your best interests.
The costs of a data breach can be broken down into a number of different expenses. Not every data breach will result in all of these costs, of course, but it’s important to know what you could be facing
- Cost to analyze the attack, including cyber-forensics, and upgrade your defenses.
- Cost of bringing in a consultant or outside contractor to analyze your infrastructure for additional weaknesses.
- Loss of income if you have to take your website or internal systems down.
- Costs of notifying customers that their data was stolen.
- Loss of data as well as contracts and partnerships.
- Fines from regulatory bodies.
- Future losses as customers abandon your company.
- Higher cybersecurity insurance premiums or loss of coverage if you’ve had multiple breaches.
Depending on your industry, you may have additional costs.
According to IBM’s annual report on data breaches, when a data breach occurs in a company based in the United States, the cost on average, is $9.44 million dollars. That’s almost double the global average of $4.35 million. The U.S. has led the world in the cost of data breaches for twelve years now, and the cost has continually increased. There are a number of different reasons for this, but it mostly has to do with the frequency of breaches and how companies respond to them.
Some companies experience data breaches multiple times. One data breach is often a wake-up call to company leadership. They see the fallout of the breach and immediately take steps to ensure it will never happen again. Other companies, though, may assume that once they’ve been hit, they’re no longer a target. Unfortunately, the opposite is often true. Once hit, they become more of a target because other cyber terrorists know they may have weak defenses.
Other companies never planned for a cyberattack, so they don’t know what to do. They have no contingency plan. Some have no data backups, so they have to literally start over. This greatly increases the cost of the data breach. Companies that routinely backup data to an off-site server and have a disaster recovery plan spend much less on breaches because they’re prepared. Wooden Spoon will assist you with creating and securing backup data so that you won’t lose everything, even if you are attacked.
One contributing factor to cyberattack costs in the U.S. needs to be highlighted, so businesses know never to do it. According to IBM, only 11 percent of the data breaches studied were caused by ransomware. This type of attack essentially locks you out of your computer, server, or an entire network. It completely prevents you from accessing your data or applications. You usually can’t even log in.
Instead, you’re presented with a screen that says your system has been locked and that the only way to gain access is to send the stated amount of money to the specified bank account. With real-life hostage situations, the person or people being held is usually released when the ransom is paid. With ransomware, however, there’s no guarantee of that happening, and it often doesn’t. Why would the cyberterrorist give up your data after getting your money? There’s no reason for them to. You likely have no idea who they are or where they’re located, so what can you do to them? In the end, they get the money, the company’s data, and the satisfaction of knowing that you can’t get into your system.
Many business owners do understand this and look at alternative means of regaining control of their computers. Some, however, actually pay the ransom. Some of them even pay multiple times because they’re attacked this way over and over. This has raised the average cost of this type of cyberattack. IBM’s study showed that companies paid, on average, $4.54 million dollars more for ransomware attacks than other types of data breaches. Don’t fall for it.
The Longer it Takes to Find a Breach, the More Expensive It Is
How long do you think it would take for you to discover a data breach and lock down your data? You’d be wrong if you say a few hours or even a few weeks. Even a few months isn’t typical. The average time from attack to detection in 2022 was 277 days. That’s over nine months. This means some businesses went at least three-fourths of the year with an active data breach. The amount of damage this can do to your business is staggering.
The more you can do to reduce this time, the better. If you can get a response time of under 200 days, you can save over a million dollars. Even 200 days is still a lot, of course. That’s over six months. It’s safe to say that you will have some explaining to your customers, investors, business partners, and others if your data was breached over six months ago and you didn’t realize it.
Wooden Spoon understands what a difficult position this would put you in and has taken steps to reduce or, better yet, completely eliminate the time between attack and detection. We use a series of monitoring tools that will watch for potential breaches. These look at incoming traffic, of course, but they also monitor user accounts and lock out those that try to repeatedly access secured data or are acting in an erratic, unusual manner.
Automated monitoring tools that use advanced AI can save you a good amount of money. They’re able to stop data breaches more quickly and can save companies millions of dollars.
Business leaders often fall for the idea that the more layers of security and types of monitoring programs you have, the more secure you are. Unfortunately, this is often a costly mistake because you pay for all of those security tools and then get hacked. The best security systems are actually those that are made up of as few moving parts as possible. Complex systems often have more vulnerabilities because there are multiple pieces that you have to try to get to fit together seamlessly. Sadly, there’s often at least one seam, and cyberterrorists know how to find them.
“Simple” doesn’t always translate to “weak” or “useless.” With a security system and monitoring tools suite that works perfectly together, there are very few weaknesses for cyberattacks to take advantage of. Simple security systems are able to reduce the cost of a data breach by making it more difficult for breaches to occur. When they do, it’s easier to see where they got in.
Being Non-Compliant Adds to Your Costs
Do you know all the security compliance regulations your industry must follow? If not, you need to read up on them as soon as possible. These regulations are required because they’ve been found to the best practices for data security in your sector. HIPAA, for example, is one of the biggest set of regulations related to storing and sharing data. If you’re in the medical industry and are not compliant with HIPAA regulations, two things occur one, you’re more vulnerable than your competitors, and two, you’re facing heavy fines and could even be forced to stop operations.
The cost to companies that aren’t compliant, then, includes all of the costs of a data breach plus the cost of any fines they incur. Your cybersecurity insurance policy may also include provisions stating that the policy will not cover any breaches that occur if you aren’t in fully compliance with the necessary regulations. This means you may end up absorbing all of the costs of the breach with no financial assistance at all.
Wooden Spoon understands compliance, and we will work closely with you and your team to make certain that your company is fully compliant with all necessary regulations. If we can boost your security measures so they’re above what’s required, that’s even better.
Don’t Let One Data Breach Destroy You Financially – Call Wooden Spoon Today
Data breaches are no joke, and neither are the costs associated with them. Don’t put your business in jeopardy by leaving yourself open to attack. By partnering with Wooden Spoon, we will help you tighten your security, comply with all necessary regulations, proactively monitor your network for attacks, and more. We’ll decrease your risk of attack, allowing you to focus on running your business without stress. To learn more, contact Wooden Spoon today.