There once was a time in software development where developers could design, build and then think about their software's security. However in today's highly connected, API-driven application environment, this approach is simply too risky as it exposes the software to vulnerabilities ...
Hidden costs in data breaches – such as lost business, negative impact on reputation and employee time spent on recovery – are difficult and expensive to manage, according to the 2018 Cost of a Data Breach Study, sponsored by IBM Security and conducted by Ponemon Institute.
What Impacts the Average Cost of a Data Breach?
For the past 13 years, the Ponemon Institute has examined the cost associated with data breaches of less than 100,000 records, finding that the costs have steadily risen over the course of the study. The average cost of a data breach was $3.86 million in the 2018 study, compared to $3.50 million in 2014 – representing nearly 10 percent net increase over the past 5 years of the study.
The study also examines factors which increase or decrease the cost of the breach, finding that costs are heavily impacted by the amount of time spent containing a data breach, as well as investments in technologies that speed response time.
■ The average time to identify a data breach in the study was 197 days, and the average time to contain a data breach once identified was 69 days.
■ Companies who contained a breach in less than 30 days saved over $1 million compared to those that took more than 30 days ($3.09 million vs. $4.25 million average total)
The amount of lost or stolen records also impacts the cost of a breach, costing $148 per lost or stolen record on average. The study examined several factors which increase or decrease this cost:
■ Having an incident response team was the top cost saving factor, reducing the cost by $14 per compromised record
■ The use of an AI platform for cybersecurity reduced the cost by $8 per lost or stolen record
■ Companies that indicated a "rush to notify" had a higher cost by $5 per lost or stolen record
The report examined the effect of security automation tools which use artificial intelligence, machine learning, analytics and orchestration to augment or replace human intervention in the identification and containment of a breach. The analysis found that organizations that had extensively deployed automated security technologies saved over $1.5 million on the total cost of a breach ($2.88 million, compared to $4.43 million for those who had not deployed security automation.)
Regional and Industry Differences
The study also compared the cost of data breaches in different industries and regions, finding that data breaches are the costliest in the US and the Middle East, and least costly in Brazil and India.
■ US companies experienced the highest average cost of a breach at $7.91 million, followed by the Middle East at $5.31 million.
■ Lowest total cost of a breach was $1.24 million in Brazil, followed by $1.77 million in India.
One major factor impacting the cost of a data breach in the US was the reported cost of lost business, which was $4.2 million – more than the total average cost of a breach globally, and more than double the amount of "lost business costs" compared to any other region surveyed. One major factor impacting lost business costs is customer turnover in the aftermath of a breach; in fact a recent IBM / Harris poll report found that 75 percent of consumers in the US say that they will not do business with companies that they do not trust to protect their data.
For the 8th year in a row, Healthcare organizations had the highest costs associated with data breaches – costing them $408 per lost or stolen record – nearly three times higher than the cross-industry average ($148).
"The goal of our research is to demonstrate the value of good data protection practices, and the factors that make a tangible difference in what a company pays to resolve a data breach," said Dr. Larry Ponemon, chairman and founder of Ponemon Institute. "While data breach costs have been rising steadily over the history of the study, we see positive signs of cost savings through the use of newer technologies as well as proper planning for incident response, which can significantly reduce these costs."