The year 2021 was a record setting one for data breaches and hacking of private and supposed “secure” data. Thousands of new cybersecurity incidents have been recorded over the past year including threats to supply chains, cryptocurrency, ransomware, and data loss. These data breach incidents are costly not only in terms of financial woes, but also in some long-term ways such as diminished trust and a blemished reputation. Today, our goal is to examine what the overall cost of a data breach may be for your organization both financially as well as in terms of your brand’s formerly good name.
The Average Financial Cost of a Data Breach
U.S. companies of all sizes are frequently the target of cyber attacks. (Yes, this means your small business is vulnerable too!) The financial impact of these breaches can be debilitating, and in some cases, business ending. According to research by Identity Theft Resource Center (ITRC), there has been an increase of 17% in the number of recorded data breaches during 2021 in comparison to 2020.Not only has the number of breaches increased but the average cost of each data breach has increased by at the very least 15%. Statistically, in the years leading up to the global pandemic costs of breaches had been relatively stable, hovering around $3.8 million since 2015. The increased cost can translate into price tags that can reach a record-breaking $4.24 million. This number includes the loss of business, cost of regulatory fines, and the cost of rooting out the hackers and creating a solution for your business. Increases in the frequency and overall cost of these hacks have especially hit the healthcare, financial, and pharmaceutical industries the hardest. For instance, the healthcare industry, (already hard hit by the pandemic,) has seen a rise in the cost of the breaches go from $7.1 million in 2020 to $9.2 in 2021.
The Hidden Costs of a Data Breach
If these numbers are not terrifying enough, there are “soft” or hidden costs of a breach that can prove to be business killing.According to InformationAge online, “about one-third of customers will stop doing business with organizations who have been breached.” The devastating impact on an organization's good name and carefully-built reputation can not be ignored when tallying up the ultimate cost of a data breach. When a breach becomes public knowledge and also becomes a problem for consumers or clients, there is a diminishing of trust and a changed perception of the strength or fortitude of an organization. That shift in viewpoint of your brand and good name can be the ultimate death-knell for a company. So, what’s the takeaway from this frightening information? Data breaches are increasing both in cost and frequency. If your organization has not yet taken a fierce position against security vulnerabilities, now is the time to do it. Our security and compliance services can help your organization shore up internal and external vulnerabilities as well as stay on top of red flags that could signal your security has been breached.