Cybersecurity in 2023: Average Cost of Data Breaches to Reach $5 Million

In 2022, the average cost of a data breach reached $4.4 million, a 13% increase since 2020. Based on the end of 2022, the average cost is expected to reach $5 million per incident in 2023. It is the role of IT consulting professionals to help businesses evaluate their own set of risk factors. Cybersecurity services are responding with awareness training, customized risk assessments, and ​protocols for ​a post-breach response.

Costs Associated with Data Breaches

Businesses can suffer the impact of a data breach for years. Some costs include network downtime, lost productivity, legal liability, business disruption, lost data, and lost intellectual property. There are also costs associated with a damaged reputation.

The most significant cost factor tends to be the lost data. IBM reported that personal customer data was compromised in 44% of data breaches, costing $180 per record. These costs are often difficult to plan for, and there is no foolproof strategy or technology to avoid a breach. Many organizations have found success in implementing Zero Trust methodologies and security automation. These practices reduce risk and lessen the financial impact by an average of $1.76M to $3.81M in the case of a breach, according to IBM's report.

Factors Impacting Your Risk Level

• Types of Data: Many businesses are responsible for protecting business, employee, and consumer data. This data includes credit card information, phone numbers, email addresses, social media accounts, and anonymous customer data. While some information may seem more sensitive, all of it is meant to be confidential.
• Industry: Some industries have higher cybersecurity risks. The healthcare and financial industries are responsible for a lot of sensitive data, and the costs of a cyberattack are often higher. Energy companies and pharmaceutical companies are also at high risk. While lower, the impacts on retail businesses have also increased.
• Outdated Technology: Technology is constantly advancing and becomes obsolete over time. Additionally, bad actors will discover ways to exploit these technologies, which becomes a risk if they aren't regularly patched or no longer supported. It's important to make sure your organization uses up-to-date systems and regularly phases out end-of-life technology.

Notification Laws

Your location matters. Every state in the United States sets its own laws for handling a data breach. For example, the Arkansas Personal Information Protection Act requires businesses in the state to use security measures to protect the data they collect. The law also requires that affected individuals be informed within a reasonable timeline in the event of a data breach.

Notification laws are meant to allow affected individuals to take protective measures against threats like identity theft. These types of laws do make data breaches more public. They also mean businesses or other organizations may need to pay settlements to those affected. Continuing our example, the Little Rock, AK school district agreed to a $250,000 settlement after suffering a very public data breach.

You can find more information on your state's specific notification laws here: Security Breach Notification Chart

Strong Cybersecurity Solutions Lower Your Risk

IBM's findings emphasize the importance of two main factors that lead to data breaches. One is a total lack of cybersecurity automation or security measures that didn't meet up with the business's risk level. Too many small businesses believe that installing any firewall will be enough to protect them from a data breach. Companies today need services like awareness training, software management, and risk assessment.

The other major factor was the need for incident response protocols. Businesses have been failing to notice their data breaches, sometimes for months. When they realize unauthorized access has occurred, they don't have a response plan or team ready to handle it. This gives bad actors unlimited time to gain data access and take the next steps.

The main goal of any cybersecurity plan is to prevent data breaches. IT professionals in every organization need to take steps to help lower the costs of data breaches.

Discovering a Data Breach

Too often, months pass before businesses notice a data breach. When a data breach goes unnoticed, authorized access can continue. This can mean a greater loss of data and a more difficult time discovering the original cause of the breach. It can also mean a greater loss of trust with your clients when the breach is eventually reported.

• Partner with a Technology Solutions Provider: A solution provider can help implement technologies and processes to detect and respond to a data breach. They will also have quicker response times, in large part because they will have a post-breach protocol in place. This helps companies minimize the damages from a data breach.
• Regular Risk Assessments: A full risk assessment is one of the best ways to determine your business's cybersecurity status. This includes finding vulnerabilities and measuring your business's most significant exposure risks.
• Awareness Training: The more employees you have, the higher your risk of phishing attacks. Security Awareness Training gives employees the information they need to stay on guard. Annual training keeps topics like malicious links, odd emails, or unfamiliar risks at the forefront to ensure everyone is prepared.
• Limiting Access: Adopting Zero Trust practices is one of the best ways to keep information safe. By limiting data access to only those who need it, you lower the risk of unauthorized access and better protect the business without impacting productivity.
• Regular Patching: Software companies regularly release patches to address newly discovered vulnerabilities in their software. As part of your cybersecurity service, regular software updates are addressed. Legacy software that may no longer be in use should be discontinued, lowering the risks of outdated software.

Ascend Can Help

Business leaders need to focus on innovation and daily business management. The threat of data breaches shouldn't be a constant worry. Ensure your business has a strong cybersecurity plan to gain peace of mind and safety by working with an experienced Technology Solutions Partner like Ascend Technologies.  

Talk to an Expert to help navigate this complex landscape and ensure ethical practice for this year and beyond.