Is the Average Cost of a Data Breach for Your Small Business in 2023 Affordable?

Data breaches are costly. Not only for massive companies like Equifax or Facebook, either. Data breaches are extremely serious, especially for small and medium-sized companies. You might know the average data breach cost in the year 2023, but it’s probably much higher than you realise. 

Millions of dollars is a startling amount that no business owner wants to deal with. Why, therefore, are these expenses so high? What other hidden costs exist besides the direct financial consequences? Most importantly, what steps can you take to shield your company from a breach of this kind? The answer lies in collaborating and taking the help of computer services in North Bay, ON.

Business owners must realise that a data breach can have serious financial and reputational consequences for their organisation. 

What Is the Price of a Data Breach?

A recent survey found that 60% of small business owners think they would fully recover within three months, and 40% estimate a cyber assault to cost less than $1,000.

Much frightening is the reality. The well-known IBM Cost of a Data Breach Report states that small organisations often incur total costs of an astounding $2.98 million in a data breach. This amount is the total of all the business expenses related to a breach, such as incident response, system maintenance, customer notification, attorney fees, and any penalties for noncompliance.

Additionally, it takes 277 days on average to find and stop a breach. This implies that it would take until October 4 to recover if a breach happened on January 1.

Sadly, the financial effects don’t end there. A large portion of the total lost business costs have increased dramatically. Companies frequently lose money due to consumers going elsewhere, declining trust, and reputational harm after a breach. This grim truth emphasises how crucial it is for companies of all sizes to have strong data security procedures.

Why Do Data Breach Incident Costs Go Up So Much?

At this point, you may think that $3 million is excessively excessive. Until you understand that “getting hacked” is simply one aspect of a data breach.

According to two distinct surveys conducted by major insurance carriers, Nationwide and Hiscox, the average cost of a cyberattack was estimated to be between $15 and $25,000 and $19,000 on average. That sounds much more sensible, yet it’s still disturbing.

However, that isn’t the entire tale.

First, those numbers only account for a cyberattack, which might or might not have resulted in a major data breach. They do not account for events such as server failures or natural catastrophes.

Secondly, they are predicated on cyber insurance claims, which frequently do not compensate for the collateral costs of a data breach, such as lost revenue or even downtime.

You also need to take several other aspects into account. Initially, intrusions frequently remain undiscovered for an extended length of time, particularly when ransomware is the cause of the breach. This security breach culprit adds 49 days to the data breach lifecycle. Higher recovery expenses and more severe data loss may result from this prolonged detection and response time.

Furthermore, the type of data involved may significantly increase expenses. These breaches frequently target confidential information, consumer data, and intellectual property, which can cause significant financial and reputational harm. Furthermore, companies operating in highly regulated industries may be penalised for noncompliance, increasing the cost of a data breach.

Upon calculating the expenses associated with business interruption, identifying and rectifying the security breach, retrieving all data, informing clients, and covering any associated legal bills and penalties, $3 million suddenly seems reasonable.

What Are a Few Typical Causes of a Data Breach?

Numerous factors can lead to data breaches. The most frequent attack vectors include cloud misconfigurations, phishing attempts, and credentials that have been lost or exploited. Unexpectedly, human mistake accounts for 88% of data breaches. Examples include unintentional data loss, company email compromise, and falling for phishing scams.

Attacks using ransomware are also common; 19% of respondents said they had experienced one, and two-thirds said they had paid the ransom. It’s also important to note that companies are now more susceptible to hacks due to the transition to remote labour, which has given hackers additional opportunities.

What Other Non-Creditable Losses Could a Data Breach Incur?

A data leak can have equally catastrophic non-financial effects as monetary losses. These can include significant legal consequences, harm to one’s reputation, and declining customer trust. Intellectual property theft can also cause businesses to lose their competitive edge and experience lower productivity as they recover.

Furthermore, employees may have psychological effects from data breaches, including stress, low morale, and possibly even turnover. A breach affecting partners, staff members, or clients may also result in damaged company relationships.

Moreover, the majority of small organisations are unprepared for the typical cost of a data breach. Do you have $3 million lying around for a possible hack? The inability to anticipate the expenses of a data breach could result in small business owners losing everything.

How Can You Avoid Having to Cover the Expenses of a Security Breach?

Data breaches are more than just a costly hassle. They pose a terrible and maybe fatal threat to businesses.

So, what steps can you take to safeguard your company?

Invest in cybersecurity: You can save a lot of money over time by identifying and preventing breaches. Modern measures like multi-factor authentication, zero trust security, and password monitoring can assist.

Backup Your Data: Ensure that all of your data is regularly and securely backed up and that, in an emergency, you can swiftly restore it.

Have a Trusted To Oversee Your Network: Most companies lack the workforce to handle cybersecurity effectively. Think about collaborating with an IT firm that will secure your network and data.

A proactive approach to data protection is necessary to avert a data breach. Investing in cybersecurity measures, including antivirus software, firewalls, and encryption, is imperative. Maintaining regular data backups can help reduce the likelihood of major data loss.

Unauthorised access to sensitive data can be avoided by implementing a zero-trust security model, which treats every access request as possibly dangerous. Finally, training staff members on the warning signals and potential dangers of phishing scams and other online threats can greatly lower the likelihood of a breach brought on by human error.

Recognizing the average cost of a data breach in 2023 is the first step in safeguarding your company against these expensive occurrences. But there are other factors at play besides the financial ones. In the long run, reputational harm and declining customer confidence can have equally detrimental but more difficult-to-measure effects.

It is better to prevent than to cure. You can protect your company from harm and save money by taking preventative measures with your cybersecurity. Data breaches can be costly. Don’t expose your company to online attacks. Make an appointment for a session with computer services specialists right now to get assistance navigating the data security challenges in 2023.