Data breaches are costing businesses millions

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While the average cost of a data breach is $3.86m, new research from IBM Security and Ponemon Institute has revealed that the cost of a “mega breach,” where 1m to 50m records are leaked can range from $40m upwards to $350m.

The 2018 Cost of a Data Breach study, which was conducted by Ponemon Institute and funded by IBM, utilised data from interviews with almost 500 companies that have suffered data breaches to explore the hidden costs associated with a breach. These include negative impact on a business' reputation and employee time spent on recovery.

The study found that the average cost of a data breach globally has increased by 6.4 per cent when compared to last year's report.  In this year's study, IBM Security and Ponemon Institute calculated the costs associated with “mega breaches” to reveal that a breach of 1 million records costs $40m while a breach of 50 million records costs $350m.

Mega breaches have also been on the rise with just nine occurring in 2013 compared to 16 taking place during 2017. The study also highlighted the fact that in 10 out of 11 mega breaches, malicious and criminal behaviour were to blame.

Detection time was also affected with the average mega breach taking 365 days to detect and contain while smaller scale breaches generally take 266 days. 

Lost business as a result of a mega breach was the biggest expense category with breaches of 50m estimated to cost companies $118m in business.

Global lead for IBM X-Force Incident Response and Intelligence Services, Wendi Whitmore shed further light on the hidden costs of a data breach in a statement, saying:

"While highly publicized data breaches often report losses in the millions, these numbers are highly variable and often focused on a few specific costs which are easily quantified. The truth is there are many hidden expenses which must be taken into account, such as reputational damage, customer turnover, and operational costs. Knowing where the costs lie, and how to reduce them, can help companies invest their resources more strategically and lower the huge financial risks at stake."

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