In 2017, data breach mitigation costs fell year-on year; however, that appears to be a blip. The 2018 Cost of a Data Breach Study conducted by the Ponemon Institute (on behalf of IBM Security) has revealed data breach mitigation costs have risen once again.
The Ponemon Institute conducts the Cost of a Data Breach Study every year. For the 2018 study, the Ponemon Institute conducted interviews with 2,200 IT, data security, and compliance professionals from 477 companies in 15 countries, including the United States, United Kingdom, Germany, France, Canada, Brazil, Japan and Australia. The companies represented in the study came from a wide range of industry sectors. Each of those companies had experienced a data breach in the past 12 months.
Naturally, the larger the breach, the higher the cost of mitigation is likely to be. Breaches involving millions of records would naturally cost more to resolve than breaches of 50,000 records. Catastrophic data breaches – those involving millions of records – are not normally included in the study. This year was the first time that mega data breaches – those involving more than 1,000,000 records – were included, although they were treated separately.
The analysis of the main part of the study involved breaches ranging from 2,500 records to a little over 100,000 records. The average breach size was 24,615 records globally, 31,465 records in the United States, 22,800 records in the UK, and 19,200 records in Japan.
The costs associated with those data breaches was analyzed using the activity-based costing (ABC) methodology. The ABC methodology identified four process-related activities and assigned costs based on actual use. Those activities were Detection and Escalation, Post Data Breach Response, Breach Notifications, and Lost Business Cost. The analysis identified the average total cost of a data breach taking all four activity areas into account.
The study also revealed measures taken prior to the breach, during, and after, that can limit losses or increase data breach mitigation costs.
Average Data Breach Mitigation Costs Have Reached $3.86 Million
A data breach now costs an average of $3.86 million to revolve. Last year, the average cost of a data breach was $3.62 million. Data breach costs have therefore increased by 6.4% in the space of a year.
On average, per capita data breach mitigation costs rose by 4.8%, with a data breach costing, on average, $148 per record. Last year, the global average was $141 per record.
In addition to the rising cost, the severity of the breaches also increased, with the data breaches in this year’s sample impacting 2.2% more individuals on average.
Data breaches cost more to resolve in the United States than any other country. The average data breach mitigation costs in the United States is $7.91 million per breach. The lowest costs were in India, where the average breach cost was $1.77 million. The highest per capita costs were also in the United States at £233 per record.
Hackers and malicious insiders caused the most breaches and they were also the costliest to resolve at $157 per record. System glitches cost an average of £131 per record and breaches caused by human error cost the least at $128 per record.
Data breach costs varied considerably by industry sector, with healthcare data breach mitigation costs the highest by some distance at an average of $408 per record, followed by financial services breaches at $206 per record, services at $181 per record, and pharmaceutical industry breaches at $174 per record. Breaches in the education sector cost an average of $166 per record, retail industry breaches were $116 per record, and the lowest data breach mitigation costs were in the public sector at $75 per record.
The study of mega data breaches revealed a breach of 1 million records costs an estimated $39.49 million to resolve, while a breach of 50 million records costs an estimated $350 million. Since there were only 11 breaches of more than 1 million records in the sample it was not possible to accurately calculate the average cost of these breaches.
What Factors Affect Data Breach Mitigation Costs the Most?
For the study, 22 different factors were assessed to determine how they affected data breach mitigation costs. The most important cost saving measures that can be taken to reduce the cost of a data breach are having an incident response team ($14 less per record), widespread use of encryption ($13.1 less per record), BCM involvement ($9.3 less per record), employee training ($9.3 less per record), participation in threat sharing ($8.7 less per record) and use of an artificial intelligence platform ($8.2 less per record).
The main factors that increased data breach mitigation costs were third party involvement ($13.4 more per record), extensive cloud migration at the time of the breach ($11.9 more per record), compliance failures ($11.9 more per record), extensive use of mobile platforms ($10.0 more per record), lost or stolen devices ($6.5 more per record), and extensive use of IoT devices ($5.4 more per record).
With the cost of data breaches rising, more cyberattacks being conducted, and the likelihood of a breach being experienced now higher, it is essential not only for companies to implement layered security defenses, but also to make sure they are prepared for the worst.
Companies need to assume a breach will be experienced and policies and procedures need to be developed to deal with the breach when it happens. An incident response team should be prepared to spring into action to ensure everyone known what needs to be done when disaster strikes. The sooner a breach is identified and mitigated, the lower the breach mitigation costs will be.