Breaking Down the Cost of a Data Breach

Recently major data breaches have affected not only the companies but their customers. The Panama Papers is a great example of the collateral damage a breach can cause. Many of these breaches have been malicious attacks made by hackers. Other breaches can be caused by a system glitch or human error. No matter the cause, data breaches on average cost a company $4 million. This information comes from the Cost of Data Breach Study that was sponsored by IBM and conducted by the Ponemon Institute. According to the study, breaches were up by 29% from 2013. The study also demonstrated how fast the problem is growing; 64% more security incidents were reported in 2015 than in 2014. In addition, the study details which countries and industries are targeted more frequently . For instance, the United States pays the most for a data breach, on average it cost $7.01 million. The report also breakdowns the detection, escalation, and notifications cost for a data breach.

What are the Primary Causes of a Data Breach?

According to Insights From the 2016 Gartner CIO Agenda Report, one of the largest problems IT departments are facing is the lack of talent in the workforce. This can explain a piece of the human error contributing to the data breaches. Human error accounts for 25% of data breaches. If the workforce isn’t knowledgeable about upgrades and new technology how can they properly plan? The other root cause noted for data breaches was a system glitch. A system glitch accounted for 27% of data breaches. The IBM study reported, that the largest cause of data breaches was malicious or criminal attacks. These attacks accounted for 48% the data breaches.

Tips to Mitigate a Data Breach Risk and Lessen Cost

An expert on the subject of cyber security, Brian Lapidus, wrote an article on Kroll’s blog, about his top tips for protecting businesses from data breaches. Lapidus suggested that all companies take the following steps to lessen the threat of a data breach:

  • Analyze the entire organization’s data breach risk
  • Create a comprehensive data loss protection plan
  • Educate employees about safeguarding and handling sensitive data
  • Evaluate risk systemically
  • Utilize a third-party corporate breach and data security expert to analyze the level of risk
  • Stay up to date with current software
  • Carefully vet vendors and partners to align your organization’s standards

Overall the biggest thing any company can do is plan ahead. The cost of a data breach is expensive, but more importantly, the effects that the breach can cause can be irreversible for your business.

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