When housing insurance first became available, people weren’t convinced it was a good idea. The concept of paying upfront for insurance to cover an event that might occur seemed illogical. Without a need for the insurance, people weren’t buying in.
Then a person saw their neighbor’s house catch on fire and the need for housing insurance became apparent. “It could happen to me” suddenly became a reality.
No One Is Exempt from an Attack
Every year, thousands of companies suffer from security breaches. The top sectors at risk include:
- Manufacturing: 26 percent of incidents
- Finance and insurance: 23 percent of incidents
- Professional, business and customer services: 18 percent of incidents
- Energy: 10 percent of incidents
The following headlines are prime examples of major companies affected by data breaches:
- AT&T says criminals stole phone records of ‘nearly all’ customers in new data breach
- A Ticketmaster hack may affect more than 500 million customers
- Bank of America Customers Left In The Dark About Data Breach For 90 Days
While headlines often highlight large, well-known organizations, security breaches affect companies of all sizes — and small businesses are often an ideal target.
For example:
- There were 2,365 cyberattacks in 2023, with 343,338,964 victims.
- A data breach costs an average of $4.9 million.
- Email security incidents have been reported by 94 percent of organizations.
While IT departments often promote increasing security efforts, businesses typically wait until a breach occurs before investing resources. Organizations need protection — a security insurance policy — before disaster strikes., application and business process managed services.
Take the First Step Toward a More Secure Organization
Breaking Down the Cost of a Security Breach
Following a breach, organizations incur direct and indirect costs. In the financial industry alone, security breaches cost targeted companies an average of $6.08 million. When hackers leak 50 million records or more, the costs may soar to $375 million.
In addition to the financial impact, the company’s reputation takes a hit. Customers may withdraw their accounts after a leak, causing a drop in profits and stock prices.
Sometimes, a breach leads to expensive lawsuits. Businesses need a strong PR strategy to recover from a hacking incident.
Direct Costs
Any expense incurred as a result of activities performed post-breach, such as the need for legal aid, is a direct cost.
Direct costs of a security breach may include:
- Increased investment in an organizational security program
- Federal and State regulatory penalties
- Legal aid
- Identity protection services for victims
- Hiring professionals to investigate the breach
Indirect Costs
Indirect costs are expenses incurred as a direct result of a security breach, such as lost business. These costs are easy to overlook until a breach impacts your business. The impact of indirect costs shouldn’t be underestimated, as they often make it difficult for companies to recover from an attack.
According to a study conducted by the Ponemon Institute, companies spend almost twice as much on indirect costs as they do on direct costs.
Indirect costs may include:
- Employee time spent on recovery (downtime, time to restore, time to recover, time spent notifying customers)
- Lost business and customer turnover
- Negative impact on reputation
- Litigation by impacted customers
- Damage to company databases
- Increase in the cost of obtaining new customers (due to failed trust)
What Is the Average Cost of a Data Breach?
The average data breach cost can vary depending on the size and nature of the breach, as well as the industry and location of the affected organization. However, the global average cost of a data breach was $4.88 million in 2024.
This cost includes expenses such as investigations, remediation, notification, legal fees, and lost business. The study also found that the average cost per lost or stolen record was $150.
As of 2024, the top five most vulnerable industries include:
- Transportation
- Manufacturing
- Finance and insurance
- Professional, business and customer services
- Energy
Protect Your Business
Protecting your business from security breaches could save about $2.2 million and preserve your company’s reputation.
Take the following measures to secure your business.
Proactive Measures: Prevention Through Technology
AI/ML tools are continuously learning and updating, which helps you stay ahead of the latest cyber threats. You could also invest in zero-trust architecture that requires authentication for each login. Encryption scrambles your sensitive data, while employee training helps your company prepare for threats.
Reactive Measures: Responding to a Breach
Write a breach response plan that provides clear instructions for recovering after an attack. Afterward, your forensics team will find the source while you talk to lawyers about your legal response. Hire a publicist who can explain the issue to the public while minimizing the damage to your reputation.
No business is exempt from attack. Security breaches impact both large and small organizations.
Think of your security program as an insurance policy. The more proactive you are, the less likely it is that your organization will experience an attack and be forced to learn the true cost of a security breach.
Unsure where to begin? Start with an IT Security and Risk Assessment. Our team can help you develop a cybersecurity solution that minimizes breaches and helps you respond to and contain threats as they emerge.
