Data breaches can be extremely costly for businesses but do you actually know what the costs of a data breach are? We’ve researched some of the main costs and they certainly gave us pause for thought. With the coming of GDPR on May 25th and the new requirement on businesses to make data breach reports within 72 hours, being prepared for and preventing data breaches will become critical. The costs of a data breach may shock you:
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Data Breach Definition
A data breach is defined as “a security incident in which sensitive, protected or confidential data is copied, transmitted, viewed, stolen or used by an individual unauthorized to do so”.
Average cost of a data breach is $221 and every second 59 data records are breached Click To TweetData Breach Facts
Breachlevelindex.com has compiled numbers on data breaches for the last 4 years:
2017 1,766
2016 1,981
2015 1,883
2014 1,743
According to their stats, every day 5,110,476 records are breached which is equivalent to 212,937 records being breached every hour, 3,549 records breached every minute and 59 Records breached every second.
It also may surprise you to learn that the average time organisations took to identify a breach was 6 months with the average time to contain a breach once discovered being an additional 66 days. (www.irishtimes.com)
Costs of Data Breaches
A study by IBM and the Ponemon Institute examined the costs incurred by 64 U.S. companies across 16 industry sectors after those companies experienced the loss or theft of protected personal data.
The average breach cost in 2017 was $3.5 million.
They also calculated that the probability that a US company will experience a breach in the next 24 months that will cost between $1.1M and $3.8M to be 27%.
Estimated costs of a data breach are $221 per stolen record according to the 2016 Data Breach Study by the Ponemon Institute and IBM.
10 Biggest Expenses of Data Breaches
Business Insider reports that in 2017, data breaches cost US businesses an average of $7 million. They broke down the 10 biggest expenses:
1. Remediation
An average cost of $21,155 per day, or a total cost of $973,130.
2. Loss of customers
76% of consumers said they would move away from companies with a high record of data breaches.
3. Business disruption
It has estimated that disruption to business will be 39% of total external costs including costs associated with business process failures and lost employee productivity.
4. Regulatory fines
GDPR fines due for non-compliance will be 4% of a company’s global revenues or €20 million, whichever is greater.
5. Legal costs
These include settlement costs and legal bills. Some companies have had to pay upwards of $10 million to settle and those costs don’t include charges paid to their legal teams.
6. Public relations
The harm to brand and reputation, diminished goodwill. You may need to establish a PR centre to keep the media, victims, stakeholders, and employees informed of the aftermath.
7. Breached client record costs
$221 per record
8. Direct financial loss
If hackers access your financial accounts
9. Notification costs
In 2016, average notification costs were $0.59 million.
10. Identity theft repair and credit monitoring
Costs of repairing identity theft and credit monitoring are about $10 per victim.
Data Breach Costs Are Rising
According to Tech Central, a global study by Kaspersky Labs shows that the average cost of a data breach has risen by 11% in 2017. For enterprise the average cost breakdown was as follows:
- Additional Internal Staff Wages – $207,000
- Improving Software/Infrastructure – $172,000
- Employing External Professionals – $154,000
- Training Staff – $153,000
- Lost Business – $148,000
- Compensation – $147,000
- Hiring New Staff – $124,000
- Damage to Credit Rating/Insurance – $118,000
- Extra PR – $113,000
This adds up to a whopping total of $1.3M.
Recommended Reading: These are the Colossal Facts and Costs of Data Breaches [INFOGRAPHIC]
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About The Author:
Before joining Rinodrive, Jill Holtz founded Mykidstime.com and Digital4Sales.com, as well as a spin-off company Clearbookings.com.
In her past life, Jill worked in CRM and Marketing Support managing projects for British Gas, Royal Bank of Scotland, Barclays Bank, AIB, as well as holding product management and communication roles in several technology companies. Jill holds a BSc in Mathematics from University of Glasgow, an MSc in Operational Research from University of Strathclyde and a 1st class honours Executive MBA from NUI Galway. Jill was included on Technology Voice’s 2014 list of Ireland’s Talented Technology Women. She has a passion for digital and social media marketing and is an experienced writer and speaker.
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