When malevolent insiders or outsiders obtain illegal access to sensitive data or information, like medical records, financial documents, or personally identifying details, this is known as a data breach.

One of the most frequent and expensive forms of cybercrime is data breaches.

They are frighteningly common and have a wide range of impacts on enterprises of all sizes, types, and locations.

According to IBM and the Ponemon Institute’s estimate on the cost of data breaches in 2023, the average cost of a data breach will hit a record high of $4.35 million.

The Ponemon Institute and IBM Security research consider hundreds of cost factors, such as legal fees, regulatory fines, technical expenses, lost sales, and staff time.

Data from over 3,600 interviews was used to conclude 550 data breaches in 17 countries and 17 different businesses.

This post provides a concise overview of the report’s core findings, intending to assist you in tailoring your data security and breach prevention methods to the most pressing threats in the coming year.

Reasons Why it’s Significant

A recent analysis from IBM Security estimates that the average price of a data breach will be $4.4 million this year.

In the analysis, over half of the businesses confessed that they had increased consumer prices due to these expenditures.

As the cost of data breaches continues to rise, customers will probably bear the brunt of this.

IBM Security reported a data breach’s average cost reached a record high of $4.4 million in 2018. That was an increase of 13.0% from 2020 and 2.6% from one year ago.

More than half of the companies questioned admitted to IBM that they had increased rates for their goods and services to cover the costs incurred.

This year’s study is based on an examination of 550 companies’ data breaches between March 2021 and March 2022.

IBM funded and analyzed the study, which the Ponemon Institute undertook. There are both short-term and long-term costs factored into the estimations.

Some expenses, like paying ransoms and those associated with detecting and managing the breach, are usually accounted for immediately.

In contrast, others, such as financial penalties and lost sales, may not surface for years.

Respondents reported that, on average, they didn’t start paying more than half of the costs associated with a breach until more than a year after it happened.

A good example of this is On Friday, T-Mobile said it would pay $500 million to resolve a consumer class action lawsuit over a data breach disclosed about a year ago that compromised the confidential info of approximately 76.6 million citizens.

How Do We Define A Data Breach?

Data Breach

A data breach occurs whenever an unauthorized party obtains, uses, or discloses sensitive information belonging to another party.

A data breach might be the result of unintentional actions on the part of either an insider or an outsider.

An accidental data breach occurs, for instance, when a person sends sensitive information to the wrong email address.

Any instance in which an employee gains access to private client or company information without proper authorization is grounds for termination, whether purposefully or unintentionally.

According to Verizon’s 2018 Data Breach Investigation Report, seventeen percent of data breaches occur by accident.

However, most breaches are intentional and driven by financial gain. They’re bad for business and bad for customers in different ways.

The nature of the intrusion can distinguish the following groups of data breaches:

  • This breaches confidentiality if an outsider or an internal employee obtains access to private information without authorization. Information like medical records is prone to this problem.
  • When sensitive information is made inaccessible due to a cyber assault, this is known as an “Availability Breach.” For instance, this happens when attackers use ransomware to encrypt or lock specific data files.
  • A data integrity breach occurs when an unauthorized party, whether internal or external, makes unauthorized changes to private information. Since no information is lost, it might be quite some time before a company realizes a security breach has occurred.
  • Each of these sorts of breaches may happen independently or simultaneously, depending on the circumstances. Any information about a company’s clients, staff, or operations is considered private.
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A “Cyber Tax” On Consumers

Hendley observes that despite growing advice from cybersecurity experts for businesses to prepare for a system breach, many companies can still not prevent attacks and instead shift the costs onto customers.

According to his reasoning, consumers and clients bear the costs of a “cyber tax” due to data breaches and cyberattacks.

There will always be a way in; therefore, we believe the best investments we can make is to attempt to move the line from securing the boundary to understanding like the attackers.

“When you consider that 83% of organizations have been penetrated at least once in their career, it becomes difficult to conclude that we must impose compensatory damages to prevent breaches.

The survey noted diverse patterns among industries in coping with cyberattacks, as well as the categorization of breaches and penalties as a cyber tax.

Companies that were able to discover and respond to breaches in less than 200 days saved an average of $1.1 million (or 23%).

Average Cost Of A Data Breach In Healthcare

The financial impact of a data leak could vary greatly from sector to sector.

In 2022, the highly restricted healthcare industry paid an average of $10 million per data breach, much above the second most costly sector, the financial sector, which paid an average of $6 million for each breach.

Third place was shared by the pharmaceutical industry and the technology sector, which each paid around $5 million per breach.

Even if there are indications that ransomware assaults have dropped somewhat this year, ransomware remains to impact businesses substantially.

Businesses that pay ransoms to save money on clean-up expenses, according to the survey, but only to a certain extent. 

Furthermore, according to “Ransomware: The True Cost to Business,” research published by Cybereason last year, 80% of organizations that pay the ransom are attacked again.

Phishing Attacks Are More Expensive Than Ransomware

Phishing Emails

Other studies have shown how devastating ransomware can be for businesses that aren’t prepared for damaging cyberattacks.

They reported that 63% of affected businesses worldwide and 58% of US businesses reported a significant drop in income due to ransomware attacks.

Overall, 31% of global enterprises have closed due to the attacks.

“It is intriguing to see the pricing difference between ransomware victims who decided to pay and those who did not. 

It’s very uncommon for victims of an attack to be attacked again within a few months, compounding their financial losses even further: “Those who spend are often targeted again.”

When deciding whether or not to pay, it’s crucial to keep these things in mind.

However, the first attack vector also played a major role in the total expense. Third-party risks and stolen credentials accounted for damages of roughly $4.5 million per event.

Business email compromise (BEC) and phishing attempts caused the greatest average breach expenses at about $4.9 million per incident.

Technologies that have the potential to have the greatest effect on data breach expenses were also identified in the IBM-Ponemon report.

It has been estimated that businesses using AI/ML technologies, DevSecOps methods, and an incident-response team can save $300,000, $276,000, and $253,000 for each incident.

On the other hand, the cost-per-incident rose the most for businesses that struggled with complicated security systems, moved operations to the cloud, and experienced compliance problems.

The study analyzed data from over 3,600 interviews with employees at 550 businesses of varying sizes and focused on data breaches involving 2,200 to 102,000 records.

Any violations outside of that window were not tallied.

Average Cost Of A Data Breach By Country?

The average cost of a data breach in the United States is US$9.44 million, which is far more than the cost in any other country (more than double the global average).

In 2022, the average cost of a data breach in the Middle East will be $6.46 million, making it the second most costly region in the world.

In 2022, the average cost of a data breach in Canada will be USD 5.64 million, placing it third overall.

The Biggest Data Breaches And Leaks Of 2022

An estimated 22 billion records were compromised due to the more than 4,100 data breaches that made headlines that year.

According to Security Magazine, an online journal specializing in cyber security, projections for 2022 are even higher.

This article lists the top cyber security news stories of 2022, including the data breaches, disclosures, phishing, ransomware, and cyber attacks that made the list.

In doing so, you put your trust in businesses each year.

You have faith that they will protect it, keep it safe from hackers, and take necessary precautions to prevent any rogue actor armed with a cryptocurrency wallet from accessing your private information.

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Unfortunately, some of these businesses fail, and their customers’ personal information is sold on the underground market or even the mainstream Internet.

Only the worst offenders’ names and specific offenses have changed since last year.

Both the sheer volume of data exposed and the variety of sensitive information stolen make the following breaches the most significant of 2022.

  • Neopets: July 2022
  • Kiwi Farms: September 2022
  • September/October 2022: Los Angeles Unified School District
  • January 2022: Crypto.com
  • Transportation Network Company, Uber: September 2022

Detection and Response

Recognizing and reacting to potential threats is an integral part of any security program.

More than 80% of businesses are boosting spending on detection systems and response technology, indicating a desire for a cutting-edge solution to the growing complexity of cybercriminals.

XDR (extended detection and response) is being considered by many in the security industry as a way to improve security effectiveness by uncovering previously unknown dangers.

With Secureworks TaegisTM XDR, you can see everything happening throughout your whole network, even the parts that aren’t connected. 

This is especially useful in today’s networks, where protecting against vertical and horizontal threats can be challenging.

The security industry is continuously absorbing and adjusting to the most recent strategies employed by cybercriminals.

The combination of Secureworks’ security knowledge, cloud-based security analytics platform, and global threat information allows businesses to prevent data breaches.

How To Prevent Data Breaches

Data Breach

Avoiding data breaches is the best defense against the stress and financial burden they can cause. Data breaches can be avoided if you spot the warning signs.

A data breach occurs when hackers gain access to private information. The monetary costs of such breaches are enormous.

Both organizations and their personnel must adopt best practices in data breach prevention. Such things consist of:

Use Strong Passwords

Weak passwords are the leading cause of data breaches because they allow attackers to acquire user credentials and access business networks.

Further, users frequently employ the same or similar passwords for various accounts, making them vulnerable to brute-force attacks.

For this reason, you should employ formidable passwords that make it more challenging for hackers to access your accounts. Use a password manager if you have many accounts.

Utilize MFA (Multi-Factor Authentication)

Users and businesses should never put their trust in passwords alone because of the vulnerabilities they present.

With multi-factor authentication, users must do more than just enter a login and password to gain access.

Because of this, it is more likely that they are who they claim they are, which reduces the risk of a hacker gaining an illegal connection to accounts and organizational systems, even if the hacker obtains the user’s password.

Keep All Software Up To Date

To avoid exploits of software vulnerabilities, you must always utilize the most recent version available.

Always update and patch software as prompted, and always use automated software updates if they are available.

Use Secure URLs

Users should only visit verified, secure, Uniform Resource Locators (URLs) or web addresses.

Hypertext Transfer Protocol Secure.com addresses are what you should be looking for in this case (HTTPS).

Furthermore, it is crucial that you only use verified URLs. Do not, under any circumstances, click on a link in an unsolicited email.

Train And Educate Staff

Corporations must brief their staff on online dangers, outlining the most common forms of cyberattacks and providing tips on identifying and avoiding them.

They should also offer refresher courses and ongoing training to remind workers to keep cybersecurity at the forefront of their minds and to update them on any new dangers they may face.

Create A Response Plan

With cybercriminals growing more sophisticated and cyberattacks becoming more common, organizations must have the plan to deal with the worst-case scenario.

They need a clear plan for what to do after an assault, including who will report it and how.

Finding out what information was taken, modifying and reinforcing passwords, and keeping an eye out for fraudulent behavior are all necessary steps.

Final Thoughts

What is the average cost of a data breach in 2023?

Whatever the final count, experts agree that preparation is the key to dealing with the financial fallout from a data breach.

Reduced breach costs can be directly attributed to faster incident response times. The worst losses are the ones that aren’t seen for a long time or have a slow or ineffectual response. 

A post-breach mentality is essential in modern cybersecurity, as it is accepted that a successful data breach will occur at some point.

Your ability to adapt and respond quickly and effectively in such a setting depends on your decision-making and preparation.

Sources

IBMKiteworksErmetic
CNETVerizonCybereason
Security MagazineStatista