Costs of Data Breaches Disproportionately High for Small Businesses

IBM’s 2019 Cost of a Data Breach Report finds among other things that data breaches have a disproportionately high negative impact on small businesses as compared to their larger brethren. Also, as compared to the rest of the world, the cost of data breaches in the United States is substantially higher than the rest of the world. Neither of these are good news if you are and SMB here in the States.

Image Source: IBM 2019 Cost of a Data Breach Report

“We found significant variation in total data breach costs by organizational size. The total cost for the largest organizations (more than 25,000 employees) averaged $5.11 million, which is $204 per employee. Smaller organizations with between 500 and 1,000 employees had an average cost of $2.65 million, or $3,533 per employee. Thus, smaller organizations have higher costs relative to their size than larger organizations, which can hamper their ability to recover financially from the incident.” –IBM Security

Some other interesting findings:

Lost Business is the Biggest Cost of a Breach

The loss of customer trust that accompanies a data breach translates into significant financial loss for businesses. The study found that the average cost of lost business attributable to a breach was $1.42 million or roughly 36% of the total average cost of a breach which now clocks in at a substantial $3.92 million.

Costs Linger for Years

Approximately 1/3 of data breach costs manifest more than one year after the incident occurs. So, while roughly 2/3 of the costs happen relatively quickly it can take upwards of 3 years or longer for all of the costs to work through the organization. The study found that the more regulated the environment the organization plays in the more evenly the costs are spread out over the first 3 years.

Breach Life Cycles are Getting Longer

As compared to previous years, the time between a breach incident and full containment of that breach is getting longer. This year’s report found a lifecycle increase of 5% vs. 2018.

Malicious Attacks are the Most Common and Most Expensive

This of course is bad news for all since the amount of breaches being caused by malicious attacks is growing by leaps and bounds. As compared to 2014, the share of malicious breaches has grown by 21% and now represents 51% of all breaches. And, because the life-cycle of a malicious breach tends to be longer their costs are also elevated. As compared to the average human error breach the average malicious attack costs roughly 27% more.

Prevention is Less Expensive than Recovery

As with most things, Ben Franklin’s adage “an ounce of prevention is worth a pound of cure” holds true when it comes to data and network security. Here at Konsultek we help our customers of all sizes and across all industries cost effectively prevent data loss by developing custom security solutions that fit their unique needs. So, if your organization agrees with Mr. Franklin, please give us a call sooner, rather than later to learn about how we can help you get an ounce of the right kind of prevention.

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