The Strategist

IBM: Average damage from a data breach grew to $ 4 million

07/01/2016 - 13:15

IBM Security Division published results of a global study on financial consequences of data breaches. The study by Ponemon Institute, supported by IBM, found that the average amount of losses from data leaks has increased by 29% from 2013 to $ 4 million per incident.

Jeff Keyzer via flickr
Jeff Keyzer via flickr
Number and complexity of cyber security incidents continues to rise. In 2015, IT specialists reported 64% more attacks than in 2014. Moreover, the more complex are the threats, the more finances they require.

Other research has shown that damage to companies from each stolen database record is an average of $ 158. Leakage of data in highly regulated industries is even more expensive. In healthcare, for example, it may amount to $ 355 per data record. This is $ 100 more than in 2013. 

According to the study, creation of a security incident response team is the most important factor in reducing losses from data breaches. This step allows businesses to save an average of about $ 400 thousand (or $ 16 per data record).

Cost of response measures, such as investigation into the incident’s causes, interaction with customers, attracting lawyers and publication of regulatory requirements, makes up 59% of the damage from a data breach. Some of these costs can be explained by the fact that, for example, 70% of executives from US companies in charge of security issues, said that they had no ready response plans for incidents.

The process of responding to security breaches becomes extremely complicated and time consuming without proper planning. In particular, companies need to take the following steps:

•    interact with the IT department or external experts in the field of security for prompt detection of the information leaks source and prevent further loss of data;
•    report the incident to the appropriate government/regulatory authorities, observing deadlines to avoid penalties;
•    inform customers, partners and other stakeholders about data leakage;
•    establish a hotline and provide monitoring tools for affected customers.

Each of these steps takes a huge amount of staff time, distracting them from current affairs, and forcing to spend valuable human resources to address the problem.

An Incident Response Team would speed up, simplify the process of attacks recognition, and restore the system. It should composed of experts who know exactly what to do if the data was compromised.

The team coordinates all aspects of ensuring safety of operations and response - from help in resolving the incident to performance of specific tasks and compliance.

The study also showed that as time for detection and prevention of data leakage grows, the more costly liquidation of its consequences becomes. If the leakage detected in less than 100 days, then the cost amounts to approximately $ 3.23 million. Cost of leakage detected after the 100 day mark, however, is averagely $ 1 million higher ($ 4,380,000).

"The amount of time, effort and costs that companies face due to data leakages, can be incredibly large. Unfortunately, most companies still do not have an effective plan for these processes, said Ted Julian, Vice-president of IBM's Resilient. - Since the risk is inevitable, it is necessary to have a consistent and automated plan for responding to security incidents, as well as access to necessary resources and skills. These conditions are directly related to price of a company's recovery from the attack".