leftArrow

All Blogs

Deciphering the True Cost of a Data Breach in 2024

Updated Date: Aug 22, 2024
What is the Cost of a Data Breach?

Quick Summary: This article will provide deep insights into the cost of data breaches, helping you understand the financial implications of a cybersecurity breach. You will also get the understanding of the financial impact of a data breach by industry, country, and company size. Read on to get all the insights.

Data breach is a term that haunts even large conglomerates like Google, Microsoft, and Meta. As cyberattacks become more sophisticated, data breach incidents are going to be even worse. Every year companies face heavy losses due to data breaches.

These losses are termed as the costs of data breaches. They are the financial implications that companies incur after a cybersecurity incident. This cost depends on factors such as the type of data breached, severity of the incident, number of records compromised, and more.

Data breach costs have increased over time as new attack methods, risks, and vulnerabilities appear every year. Indeed, as per an IBM report, the average cost of a data breach (global) was $4.45 million in the previous year, which increased by 15% over three years.

Keep reading this article for more information about the cost of a data breach.

Avoid Heavy Costs of Data Breaches by Eliminating Hidden Threats Act Now

Table of Contents
  1. Cost of a Data Breach Over the Years
  2. The Cost of a Data Breach by Country
  3. The Cost of a Data Breach by Industry
  4. Data Breaches Costs by Company Size
  5. What Determines the Cost of Data Breach?
  6. How to Calculate the Cost of Data Breach?
  7. How to Avoid Costly Data Breaches?
  8. In Conclusion

An Overview of the Cost of a Data Breach Over the Years

Calculating the exact cost of a data breach can be tricky. It depends on many factors. Plus, every breach is unique making it difficult to assess the loss. It is also difficult because this process involves assessing the total cost related to all the consequences that are hard to determine.

Generally, estimating the cost includes expenses of incident response and recovery, penalties by legal authorities, loss from business disruptions, amount paid as extortion, etc. These are the common elements to calculate the cost.

However, there are other elements as well that are not directly visible but will impact your business in the long run. For example, the incident of a data breach will affect your brand reputation. It could lead to a decrease in revenues due to customers switching to competitors.

Nevertheless, many reports provide estimates for data breach costs based on their research. One of these reports includes the one provided by IBM which is based on the Ponemon Insititute's research. The report provides data on the cost of a data breach annually.

The table below shows the global average cost of a data breach over the years.

YearAverage Cost of a Data Breach in USDPercentage Increase from Previous Year
2023$4.45 million2.30%
2022$4.35 million2.59%
2021$4.24 million9.84%
2020$3.86 million-1.53%
2019$3.92 million1.55%
2018$3.86 million6.62%
2017$3.62 million-

As we can see from the above table the cost of data breaches is increasing with varied rates over the year. But why is it increasing? Well, the answer lies in the rising incidents of data breaches. Indeed, compared to 2022, data compromises increased in 2023 by 78%.

Data compromises occur for many reasons. The constant rise of cyberattacks is a big problem for this. However, according to Verizon’s IDBR, a human element was involved in most cases of data breaches at 68%, in 2023.

It includes human errors like weak passwords, downloading malicious attachments, and more. Attackers use social engineering tactics like phishing to trick people into revealing their sensitive information.

Global Average Cost of a Data Breach

The Cost of a Data Breach by Country

According to BlackBerry’s Global Threat Intelligence Report, the USA experiences the most cyberattacks. So, there is no doubt that the average data breach cost in the USA is higher than in the rest of the world.

In fact, it is higher than the global average. While the average cost of data breaches globally in 2023 stood at $4.45 million, it was $9.44 million in the USA. After the USA, Canada takes the second position with an average cost of $5.13 million.

The costs of data breaches are increasing in the USA as we can see in the following graph.

Cost of Data Breach in the USA

Apart from the USA and Canada, there are many other regions or countries that have seen a sharp spike in the average cost incurred due to data compromises. Moreover, some countries or regions have also witnessed a decline in the cost in the same period. The table below shows a comparison between the costs from 2022 to 2023 for different countries or regions.

Region/Country20222023Result
Middle East$7.46 million$8.07 millionIncreased
Latin America$2.80 million$3.69 millionIncreased
ASEAN$2.87 million$3.05 millionIncreased
Germany$4.85 million$4.67 millionDecreased
Japan$4.57 million$4.52 millionDecreased
Italy$3.74 million$3.86 millionIncreased
United Kingdom$5.05 million$4.21 millionDecreased
Australia$2.92 million$2.70 millionDecreased

Build a Stronger Security Posture to Protect Your Data and Prevent Cybersecurity Incidents Do It Now

The Cost of a Data Breach by Industry

When looking at the statistics for data breach costs based on the industry, the healthcare sector tops the list. There has been a sharp increase in the costs of data breaches across different industries. The healthcare sector alone has seen an 8.2% increase in the costs of data breaches.

There are various reasons for higher average data breach costs for the healthcare sector including its criticality. The sector faces strict industry regulations, and a data compromise incident can result in heavy penalties. Moreover, some industries have also seen a decline in the cost in 2023.

Let’s see a comparison table for the cost of a data breach in different industries from 2022-2023.

Industry Type20222023Result
Healthcare$10.10 million$10.93 millionIncreased
Financial$5.97 million$5.90 millionDecreased
Pharmaceuticals$5.01 million$4.82 millionDecreased
Energy$4.72 million$4.78 millionIncreased
Industrial$4.47 million$4.73 millionIncreased
Transportation$3.59 million$4.18 millionIncreased
Communications$3.62 million$3.90 millionIncreased
Hospitality$2.94 million$3.36 millionIncreased

The Cost of Data Breaches by Company Size

Data compromise is not limited to large companies, small and medium-sized companies are also affected by them. In fact, the data breach costs have increased for smaller companies compared to previous years.

As per data by IBM’s data breach report, the average cost of data compromises has increased for companies with 5000 or below employees. On the other hand, the average cost of data breaches for companies with 5000 or more has decreased compared to the previous year.

The table below shows companies with different sizes and respective costs from 2022-2023.

Company Size20222023Result
500 Employees or Below$2.92 million$3.31 millionIncreased
500 – 1000 Employees$2.71 million$3.29 millionIncreased
1001 – 5000 Employees$4.06 million$4.87 millionIncreased
5001 – 10,000 Employees$5.18 million$4.33 millionDecreased
10001- 25000 Employees$5.56 million$5.46 millionDecreased
Above 25000$5.69 million$5.47 millionDecreased

What Determines the Cost of Data Breach?

Let’s see what are the prime factors that determine the end cost of a data breach.

1. Scope and Severity of Breach

A greater number of affected records leads to increased costs for notifications and an increased intensity of damage. Also, confidential details like financial data or personal identifiers generally incur higher costs due to constant risk and regulatory attention.

2. Regulatory Environment

Compliance with standard data protection policies (e.g., GDPR, CCPA) influences costs, including significant fines and the requirement for compliance measures. Also, non-compliance can lead to a large amount of penalties based on the severity of the breach.

3. Notification and Communication

Notification costs include the expenses for intimating targeted users, such as mailing notifications and providing credit monitoring services. Also, managing costs for data breaches substantially affects the goodwill of an organization and causes a loss of trust amongst clients and customers.

4. Operational Impact

Financial losses from service interruptions, including lost revenue and increased operational expenses to restore standard services and solutions.

How to Calculate the Cost of Data Breach?

Let’s refer to the below-mentioned table that covers critical categories that determine the end cost of a data breach. Check out the table to accurately understand how to calculate the cost of a data breach.

Cost CategoryDescription
Detection and EscalationThese expenses are related to the identification of the breach which validates its extensivity in terms of damage, forensic services to investigate the breach, and other activities that are performed to escalate the issue.
NotificationPost discovering the data breach, the affected regulatory bodies are informed about the incident. This includes the cost of sending notification letters, setting up communication channels and call center services for further enquiries.
Post-Breach ResponseThe post-breach response involves activities to address the breaches proactively in the future. This covers the costs of legal fees for handling lawsuits and regulatory inquiries, credit monitoring services are provided to the affected regulatory bodies, and other precautions are undertaken to avoid further data breaches.
Lost BusinessBusinesses bear major losses due to revenue downtime, customer churn, and affected business goodwill. The expenses of customers’ compensation for inconvenience caused, and lost sales determine the lost business cost.
Regulatory FinesPenalties imposed by regulatory bodies for non-compliance cover the costs such as fines under regulations like GDPR and other legal penalties.
Operational CostsCosts related to operational disruptions and recovery such as IT security team to fix the breach, system repairs to resolve vulnerabilities, and other associated expenses in the recovery phase.

These are the estimated numbers of the factors mentioned in the table. However, the number of factors may increase or decrease with respect to business type and impact of breach on the business. But these are the prime factors that possibly take place when a data breach occurs.

How to Avoid Costly Data Breaches?

Till now you have understood how costly a data breach can be for your company. However, it not only costs in terms of money, but it also affects your market reputation, business operations, and growth. Hence you must prevent data breach incidents to ensure seamless growth.

How can you do that? Well, there are many ways to prevent such incidents as given below.

  • Strong passwords: Weak passwords are one of the most common causes of data breaches. Attackers can gain unauthorized access to a system with techniques like brute force with weak passwords and steal sensitive data. Using a strong password that is hard for the attacker to identify can protect the systems and your data.
  • Train employees: Human error can result in data compromises. Training your employees in data safety can help you overcome these challenges.
  • Use multi-factor authentication: It is an effective measure to protect your critical data. Multi-factor authentication adds another layer of security by forcing users to prove their identities even after entering their username and password. It prevents unauthorized access.
  • Handle vulnerabilities: Identifying and resolving vulnerabilities is another critical step in securing your data landscape. Continuous vulnerability assessment can help you discover weaknesses in your systems or applications and mitigate security risks.

Don’t Lose Millions due to Cyberattacks, Find Potential Risks and Avoid Security Breaches Let’s Find Risks

In Conclusion

As attackers look for new ways to breach security, companies must adopt robust security policies to defend their systems to prevent costly data breaches. A company has to face huge financial repercussions when a data breach occurs. Prevention is the best way to avoid it.

Improving your defenses against potential threats is a potent measure to prevent data breach incidents. However, it’s not just about adopting security protocols, identifying and removing hidden security loopholes in digital assets like web apps and APIs is also important.

One of the best ways to identify and resolve security weaknesses is by using DAST (Dynamic Application Security Testing) tools like ZeroThreat. A DAST tool can help you discover a myriad of vulnerabilities such as OWASP Top 10. You can build a security posture by eliminating weak spots in your digital assets.

Frequently Asked Questions

Is a data breach expensive for a small business?

Yes, they are equally expensive for both small, medium, and large businesses. As per statistics, the data breach costs have increased for small businesses compared to the previous year. So, small businesses also face considerable losses due to cyber breaches.

Which factors push up the cost of a data breach?

Why do companies incur costs due to data breaches?