What Are the Potential Costs of Cleaning Up a Data Breach?
For decades, many companies have held fast to a mentality of “it won’t happen to us” regarding potential cyberattacks, which has led them to implement minimally effective cybersecurity measures.
Ten to fifteen years ago, most companies, especially small-to-medium-sized businesses (SMBs), could have probably gotten away with this approach as, back then, internet-connected technologies were used in a relatively limited capacity in most SMBs.
However, as businesses of all sizes have grown increasingly reliant on digital resources, the threat of cyberattacks has become all the more real. Cyberattacks, and the ensuing data breaches, not only expose confidential client data but can also be financially crippling.
If you want to ensure your organization is well-positioned to ward off a cyberattack, you must first understand the potential cleanup costs of a data breach. The expenses associated with modernizing your cybersecurity programs are minuscule when compared to the cleanup costs of even a relatively minor security breach.
Key Data Breach Statistics
On a global scale, the average cost of a single data breach was approximately $4.35 million in 2022, according to Statista. However, the average cost of a breach in the U.S. specifically was more than double that, coming in at $9.44 million.
Costs are not the only breach-related metric that is on the rise. Hackers are perpetrating more breaches than ever as well. In 2021 alone, hackers compromised the data of 1,862 corporations.
Cumulatively, hackers’ efforts exposed the records of nearly 300 million people, and during the first half of 2022 alone, hackers perpetrated another 817 breaches and exposed an additional 53 million records.
While a major enterprise might be able to survive losing millions to data-breach-related expenses, SMBs are not so lucky. In fact, 60% of SMBs fail in the first six months following a successful breach or other cyberattacks.
Why SMBs Are Ripe Targets for Hackers
As mentioned above, the “it will never happen here” mentality came about due to the misconception that SMBs are not appealing targets to hackers, given that they do not store enough valuable data to be of interest to them. While it is true that hackers will not obtain nearly as much data from an SMB as they would a large corporation, the former still represents an intriguing target for several reasons.
First and foremost, far too many SMBs have antiquated (or potentially nonexistent) cybersecurity programs in place, meaning hackers can often practically stroll right into the network of a small business, snag some valuable data, and exit entirely unnoticed.
Additionally, many small businesses, such as private medical practices and dentist offices, have a treasure trove of patient data, making it one of the many reasons why healthcare is such a favorite target for hackers.
Counting the Costs of a Data Breach
The exact cost of cleaning up a data breach will vary based on several factors, including:
- The size of your business
- The industry you operate within
- The scope and scale of the breach
- What types of records were stolen
- How long the breach went unnoticed
Cumulatively, the costs of a data breach can be grouped into one of three broad categories, which are as follows:
Short-term costs include the immediate profit losses that result from a disruption to normal operations. Keep in mind that not all breaches will lead to long-term disruptions to your normal operations, but breaches that result from incidents such as ransomware attacks can interfere with operations for days or even weeks.
You can approximate the short-term costs of a breach by multiplying your average daily revenue by the number of days your operations are disrupted. If you have a skilled, in-house IT team or partner with a talented cybersecurity firm, you can probably resume normal operations within a day or so.
Long-Term Financial Impacts
Once you resume normal operations, you must begin actually cleaning up the breach, which is where things can become quite complicated.
According to an IBM report, businesses, on average, took 277 days to identify and contain a data breach, and that statistic does not account for total breach cleanup.
Depending on how long your breach goes undetected, you may need a year or more to clean it up, during which you will incur significant IT expenses. Your overall productivity will be encumbered as well, which means that your profit margins will be reduced. Additionally, you may incur fines from regulatory authorities if your business fails to adhere to relevant cybersecurity requirements.
Immeasurable Data Breach Expenses
You cannot count the costs of all data breach and cleanup expenses, as some expenses are immeasurable.
If hackers successfully infiltrate your business’ network, your company will suffer potentially irreparable damage to its image. Your customers will lose trust in your brand and its ability to protect their data.
If you operate an SMB, the damage to your brand can be financially crippling. At a minimum, it will undermine your ability to grow for months, if not years.
How Your Business Can Insulate Itself from Risk
As you can see, the potential costs of a data breach and the cleanup that follows can be substantial. Fortunately, you can insulate your business from the risks of a breach through the following measures:
Training Your Staff
Train your staff and teach them the importance of practicing good cybersecurity habits. Require them to regularly change their passwords, educate them on the signs of a phishing email, and establish a clear mechanism for reporting cybersecurity concerns.
Implementing Robust Cybersecurity Technology
The best way to protect your business is to invest in cybersecurity solutions that proactively detect and eliminate potential threats. These technologies will drastically decrease your company’s vulnerability and help you protect business continuity.
Partnering with Cybersecurity Experts
Cybersecurity is a complex discipline. Therefore, you should consider bringing in outside experts, especially if you do not have a robust, in-house IT team at your disposal. A third-party firm can conduct a cybersecurity audit, help you select solutions for your business, and improve your cybersecurity standing.
Ready to Learn More?
The costs of cleaning up a data breach can quickly rise into the millions. Fortunately, there are many ways to protect your business from external cybersecurity threats. The first step is to educate yourself on pressing cybersecurity issues that are facing your industry.
If you would like to further explore relevant and timely cybersecurity topics, we invite you to browse Cytek’s library of blog content. Our experts tackle topics like dental compliance, cyberattack trends, and general cybersecurity best practices.