Data breaches entail reputational damage and costly remediation activities, making them a complex financial issue for the entire business. Minimizing the risk of data breaches can save your organization millions of dollars and client loyalty. The best way to minimize the cost of a potential data breach is to learn how to measure the impact of a cybersecurity breach so that you protect your business from future threats.
What is a data breach?
A data breach is an activity that involves confidential, protected, or sensitive data being used, transferred, stolen, or copied by an unauthorized person. Data breaches often affect the medical, financial, or personally identifiable data of companies or individuals.
A leak of such private data can lead to financial losses in form of profits, remediation costs, as well as penalties and fines. Unfortunately, the average total cost of data breaches keeps increasing every year. Additionally, the security of many businesses was weakened in 2020 due to the sudden switch to remote work.
Hackers seized the opportunity to attack, and that’s why data breaches cases rose rapidly. By October 2021, a total of 1,290 data breaches had been reported compared to 1,110 breaches reported in 2020.
What causes data breaches?
The major motivations of cyber attackers are corporate espionage and financial gain. Less common gains are government espionage, revenge on the organization, and hacktivism. The most popular causes of data breaches include:
- Insider attacks
These attacks are caused by users with legitimate access to a company’s private data such as third-party vendors or disgruntled employees. Whether a user harms a business out of negligence or has malicious intent, their actions are usually dangerous compared to those of external attackers. Insiders already have access to the company’s network and know the information they can easily obtain.
Detecting insider attacks is difficult because insiders know the security tools deployed in a company. Their actions can remain unnoticed and harm the company silently for a long period. That’s why many businesses feel vulnerable to insider attacks.
- Social Engineering
This malicious activity is designed to obtain user data without hacking. Common types of social engineering include email compromise, pretexting, phishing, and phone calls. Social engineering became so prevalent during the Coronavirus pandemic that security agencies issued recommendations on identifying and protecting against such threats.
Unfortunately, detecting social engineering is more difficult than it seems. Research conducted by Terranova Security revealed that 67% of users submitted their sensitive data unknowingly to phishing forms.
- Human errors
Protecting your business from human errors is one of the most challenging cybersecurity tasks. Actions such as uploading information to public cloud storage or sending email messages to the wrong recipients can also result in a data breach. While you can’t predict or control human errors, one unintentional error can cost a lot of money to fix.
Harmful software like downloaders, spyware, ransomware, and Trojans help hackers access sensitive credentials or data of trusted user accounts. Malware can be installed on a computer via compromised devices or websites and email messengers. Malware tends to mask itself from security software once inside the protected network to destroy valuable information.
Hackers usually aim to steal valuable information and either use it for their own gain or sell it. The most popular forms of hacking include brute force, use of backdoors, DDoS attacks, command and control attacks, and credential theft.
How to determine the cost of data breaches
The cost of data breaches is influenced by your organization’s location and every action your organization takes. In 2020, the average total cost of data breaches was $9.05 million in the USA, $2.82 million in Australia, and $4.90 million in Germany. Determining the cost of data breaches involves calculating these components:
- Indirect costs: These costs are connected with the necessary resources required to cover losses from the data breach. They include lost profit from system downtime, expenses for issuing new credentials, credit cards, accounts, and communications regarding the effects and status of the breach.
- Direct expenses: These are the expenses that help organizations deal with the detected threats. The expenses include costs of investigation and forensic activities, compensation to affected parties, and fines.
- Lost opportunity costs: These costs account for lost opportunities due to reputational damage. For instance, a breach can result in a loss of competitive advantage on the market, a shortfall in revenue because of loss of reputation, and a loss of potential clients.
The cost of data breaches depends on various factors. That’s why you can’t predict the amount of money a data breach can cost your business because every breach is different. The only way to minimize the cost of dealing with a breach or prevent its consequences is by investing in Cisco Meraki Firewalls. The firewalls help you monitor user activity and provide alerts on security incidents to help you detect and stop breaches instead of spending a lot of money to mitigate the impact.
- Measuring the impact of multi-party security breaches, October 6, 2021 – Security Magazine
- How to Calculate the Cost of a Data Breach, November 9, 2021 – Ekran
- Measuring the Financial Impact of IT Security on Businesses – Kaspersky
- Measuring Security and the Financial Impact of Data Breaches by Advisors Team, May 23, 2017 – Focal Point
- How to Quantify the Actual Cost of a Data Breach for Your Own Organization by Julian Meyrick, August 25, 2021 – Security Intelligence
- Measuring the True Impact of a Cyberattack – The Wall Street Journal