3 Proven Ways to Mitigate the Cost of a Data Breach

The best offense is still a good defense.

Hackers don’t have to target your bank account to do serious financial damage to your business (although they may). As private data becomes an increasingly valuable commodity, hackers target the information in your networks instead of the dollars in your accounts — and the cost to your business could be much higher than you might expect. 

In today’s commercial environment, sensitive data is essential to the daily function of many businesses. Vital information related to client profiles, vendors, medical records, transaction data, and payment methods are stored in a local network or on the cloud and allow a business to efficiently carry out its day-to-day operations. That’s what makes a data breach such a serious issue for any organization. 

Lest you think such an attack is a “low-risk scenario” for your business, consider the following: 

• 60% of small businesses (less than 500 employees) are estimated to close their doors within six months following a data breach. 
• 83% of attacked businesses report that they have experienced more than one data breach. 

What is the Cost of a Data Breach to a Business?

Each year, IBM Security issues the The IBM Security: Cost of a Data Breach Report 2022 to help businesses quantify the potential impact of a data breach. This report offers recommendations to help prevent such disasters or mitigate the severity of their impact if the worst should happen. 

Data breaches are becoming increasingly prevalent – and costly. When looking at worldwide averages, the cost of a single data breach now rings in at $4.4 million. Businesses is in the United States tend to pay a much higher price for an attack. At $9.4 million, the average cost of a data breach in the US is more than double the global average. Though costs for smaller companies tend to be a little lower, breaches are often more devastating to SMEs since they don’t have the same resources as larger companies to offset all those costs. 

Remarkably, these numbers do not consider the direct theft of financial or physical resources – only data. IBM calculates the costs of this type of attack by considering the following direct and indirect factors. 

• Lost business: Disruption and revenue losses from system downtime, lost customers, acquisition of new customers, loss of reputation or goodwill 
• Detection and escalation: Investigation into a breach, audits and assessments, crisis management, executive communication 
• Notification: Communication to affected parties, work with regulators to determine responsibility, hiring of outside experts 
• Post-breach response: Legal costs, fines, issuing new accounts/cards, monitoring and protection services, discounts 

How Does a Data Breach Occur?

In its report, IBM identifies the ten most common vectors of a breach. Although determined hackers from outside of an organization are behind some of the most common types of attacks, traitors within the walls account for a fair number of data breaches as well. Sadly, many other serious data breaches are rooted in careless security practices that leaves castle gates wide open to attackers. The following five types of breaches are the most common: 

1. Stolen or compromised credentials

Accounting for 19% of all data breaches, hackers use a variety of methods to steal login information or other credentials that allow them to access your networks. 

2. Phishing 

Another hacker-driven cause of data breach, phishing is responsible for 16% of attacks in the study. Through social engineering techniques, cybercriminals convince unsuspecting employees to click dangerous links that can install malware or lead them to fake login pages that allow the hackers to access private data. 

3. Cloud misconfiguration

15% of all data breaches in the study were due to human error, lack of expertise, or weak security settings in cloud computing resources. These serious oversights leave your systems exposed to malicious external actors that find little resistance when probing your defences. 

4. Vulnerability in third-party software

Your organization undoubtedly utilizes a significant variety of software to carry out its daily tasks – either free or purchased. Regardless of its origin or price tag, vulnerabilities in these useful programs account for 13% of data breaches. Although these breaches may occur due to design flaws or coding errors intrinsic to the software, other such breaches happen when your business does not ensure that your software is properly updates and configured. 

5. Malicious Insider

Unfortunately, attacks do not just originate outside of your business. In 11% of the studied cases, a disgruntled or opportunistic employee, an employee working for a competitor, or another person with authorized access to the information was responsible for the attack. 

How Can Your Business Mitigate the Cost of a Data Breach?

Although a data breach is a very serious situation for any business, there are some very important, feasible steps that you can take to prepare yourself. Proper cybersecurity measures can drastically minimize the impact of a successful cyberattack on your business, or even completely prevent attackers from penetrating your defenses in the first place. The following list explores three of the 28 factors that IBM identifies as the most beneficial practices for mitigating the severity of a data breach. 

1. Security AI and Automation

Companies with full implementation of AI security platform saved an average of $2.95 million in the event of a successful attack compared to those without AI security platform. 

AI security platforms are flexible systems that can learn what is normal for your business, and what is cause for concern. Unlike human-dependent systems, they never clock out or turn a blind eye. Many businesses hesitate when they hear the words “artificial intelligence,” (especially in relation to security), but if you are serious about protecting your data, IBM’s study identified the presence of an AI security platform as the most beneficial cybersecurity practice that a business could implement. Organizations with no AI security ended up losing nearly double that of an organization with full implementation of such a platform. 

 2. An Effective Incident Response (IR) Team

Companies that had formed an IR Team and regularly tested their plan saved $2.66 million on average in the event of a cyberattack compared to those companies that had done neither. 

Like a Florida homeowner who has planned ahead how to protect their home from hurricanes and practiced the preparation scenario, a good IR team can respond quickly to a threat. Although they might not be able to completely prevent damage in extreme situations, an IR team can respond quickly to an attack, savings millions of dollars for the company when the storm strikes. Instead of losing days scrambling for expert advice at the worst possible moment and making costly mistakes along the way, an IR team knows “who does what” once an attack has been detected. This preparation is the business equivalent of quickly swinging storm shutters into place instead of running to Home Depot to buy plywood – only to discover that it is out of stock. 

3. A “Zero Trust” Security Approach

Companies that implemented a Zero Trust approach to security saved $1.5 million on average in comparison to companies that did not. 

Although it may sound dire, the Zero Trust security model yields exceptional results by assuming that all users, devices, and applications on a network are potentially compromised. Practically, this means an organization implements a variety of security measures to fortify their network. These measures often include: 

• Multi-factor authentication 
• Application safe listing 
• Continuous monitoring and analysis 
• Limited access to sensitive data 

How Can Your Business Take First Steps to Improve its Cyber Resilience? 

When it comes to cybersecurity, several measures can provide significant returns on investment. In addition to the three measures that we have highlighted listed above, the report also identifies a few other items that we would classify as “low-hanging fruit.” These include measures like employee awareness training, multi-factor authentication, managed security services, and cybersecurity insurance. 

If you recognize that your data might be at-risk right now but your business does not currently have the capacity to adequately address these concerns, just let us know. We have significant experience in all of the areas listed above and would love to talk through your options. NOC Technology offers free strategy sessions to businesses to discuss how you can begin to address your issues, starting with low-hanging fruit and moving higher up the tree as time and resources allow.