What Will a Data Breach Cost in 2022?

by | Jun 18, 2022 | Compliance, Industry News, Research

As more and more businesses and organizations experience security breaches, the volume of compromised data grows each year. According to data breach statistics, hackers are highly motivated by money to obtain data, and personal information, because it is a valuable type of data to steal. It’s also clear that, despite breaches becoming more common, businesses are still not well prepared. In this article, we will examine the types of data breaches that occur and data breach costs.

We compiled data breach statistics, including industry-specific data breaches and the costs and the damages, to show how companies must be prepared and take their security more seriously.

Companies know that data breaches are expensive for their businesses and their name integrity. To assess the average data breach cost, security institutes collect both direct and indirect charges incurred by the compromised organization.

According to IBM and the Ponemon Institute’s newest data breach study, the average cost of a data breach in 2021 was US $4.24 million, up 10% from the average cost of $3.86 million in 2019.

In 2021 ransomware attacks cost companies worldwide well over $6 trillion, the prognoses for 2022 is not very optimistic, and most likely, that number will increase by 8-11%.

When it comes to research, IBM Security and Ponemon Institute research a lot of elements that play a role in data breach costs, including legal, regulatory, and technical efforts, brand equity loss, customer attrition, and employee productivity drain. Its conclusions are based on data from over 3,500 interviews and 537 breaches across 17 nations and 17 industries.
The main goal of their reports is to urge companies to decrease data breach costs by addressing cybersecurity threats and strengthening their entire security posture. Data protection, data security, and data breach prevention measures such as penetration testing and red team exercises will all aid in this goal.

In this article, we’ll review some of the alarming statistics from the 2021 cost of a data breach study to save your company from becoming a 2022 statistic.

IBM Cost of Data Breach Report Key Findings for 2021

IBM and the Ponemon Institute released their 17th cost of a data breach report, which included the following findings:

  • The average total data breach cost since 2020 has increased by 11.9%.
Average Total Cost of a Data Breach
Source – Cost of a Data Breach Report by Ponemon and IBM for 2021

The average total cost of a data breach increased by the largest margin in seven years. From the 2020 report to the 2021 report, data breach costs grew dramatically year over year, rising from $3.86 million on average per company in 2020 to $4.24 million in 2021.

  • Working remotely and data breach cost.

For data breach damages, companies that use some remote working paid an average of $1.07 million per company. Remote workforces also take longer to contain breaches. Businesses with up to 60% of employees working remotely took an average of 58 days to uncover and prevent data breaches.

  • The healthcare industry’s cost of a data breach was the highest.

For the 11th year, the healthcare industry has borne the brunt of data breaches. From $7.13 million in 2020 to $9.23 million in 2021, the average cost climbed by 29.3%.

  • Lost business accounts for 38% of data breach costs.

The cost of lost revenue was the most significant contributor to data breach expenses. This includes lost income from system unavailability during a cyberattack, client attrition, and increased expenditures for obtaining new business.

  • In a data breach, the most common and most expensive type of record lost or stolen was customer PII.

In the IBM & Ponemon Institute investigation, customer PII was found in 44% of breaches. The average cost per PII record for a client was $180.

  • The Most Common Initial Attack Vector was Compromised Credentials.

20% of data breaches were caused by compromised credentials, such as hacked corporate emails.
The following are the financial implications of the top four categories of first attack vectors:

  1. $5.01 million for Business Email Compromise (BEC).
  2. $4.65 million for phishing
  3. $4.61 million for malicious insiders
  4. $4.47 million for social engineering
  • The average number of data points required to detect and contain a breach was 287 days.

The greater the economic effect of an undiscovered breach, the longer it goes unnoticed. The new average to detect a breach was 287 days. Healthcare and financial industries had the most extended data breach lifecycle at 329 days.

The average cost of data breaches discovered and contained within 200 days was $3.61 million. However, breaches that took more than 200 days to uncover cost an average of $4.87 million, a $1.26 million difference.

  • Breaches affecting at least 50 million records are 100 times more expensive.

Mega breaches with at least 50 million records cost 100 times more than an ordinary data breach.
In 2021, breaches involving 50 million to 65 million records cost an average of $401 million, up from $392 million in 2020.

  • The average data breach cost was reduced by $1.76 million, thanks to zero trust strategies.

A data breach costs an average of $3.28 million to companies that use a zero-trust architecture. Those who didn’t use zero-trust tactics had to pay an extra $1.76 million for a total of $5.01 million.

  • Controls based on artificial intelligence and automation reduced the cost of a data breach by 80%

Security Businesses could discover and contain data breaches faster because of AI and automated controls. These solutions’ installation had the most significant beneficial impact since they lowered one of the most critical elements in data breach costs – time.

  • Data Breach Costs $1.19 Million in Hybrid Cloud Environments vs. Public, Private, and On-Premise Cloud Models

Data breaches in hybrid cloud systems cost an average of $3.61 million, which is 23% less than breaches in other cloud environments.

  • Organizations with a high rate of compliance failures paid $2.3 million more on average for data breaches.

The increased data breach cost was due to system complexity and the severity of compliance violations.

  • A ransomware breach costs an average of $4.62 million.

The average cost of a ransomware attack was $4.62 million, compared to $4.24 million for a data breach.

  • The average total cost of a data breach by industry

For the eleventh year, healthcare was the most expensive industry in terms of the average total cost.

Average total cost of a data breach by industry
Source – Cost of a Data Breach Report by Ponemon and IBM for 2021

What was the Biggest Contributor to Data Breach Costs?

The most significant factor in data breach expenses was discovered to be the time. This time factor makes sense since the longer a breach goes unnoticed, the more sensitive data attackers may steal.

When business is lost due to system disruptions and client attrition, the financial effect of delayed action multiplies.

How Long Do Data Breach Effects Last?

The cost of a data breach accumulates over time. According to research on the cost of a data breach, 53% of data breach expenses were spent in the first year, 31% in the second year, and 16% more than 2 years after the occurrence.

Average distribution of data breach costs over time
Source – Cost of a Data Breach Report by Ponemon and IBM for 2021

When compared to low-regulated businesses, organizations in highly regulated industries, such as healthcare and financial services, faced the worst long-tail costs, with the cost of a breach escalating in the second and third years.

High data security regulatory regimes incurred 47% of breach expenses in the first year, 33% in the second year, and 20% more than two years following a breach.

New regulatory fines and breach reporting rules, such as GDPR, will likely be driving this trend.

How long did the average data breach last?

The time between the occurrence of a data breach and its containment is referred to as the breach lifetime.

In 2019, it took an average of 206 days to detect a breach and 73 days to contain it, for 279 days.

In 2021, the average time to detect a breach will be 212 days, and the average time to control it will be 75 days, for a total of 287 days.

The critical thing to remember is that the earlier a data breach is discovered and handled, the less harm it does.

Breach lifecycles of fewer than 200 days were $1.26 million less expensive on average than breaches of more than 200 days ($3.61 million vs. $4.87 million).

What was the most common and costly source of security breaches?

According to the yearly cost of a data breach report, leaked credentials were the most prevalent first attack vector, followed by phishing, cloud misconfigurations, and vulnerabilities in third-party software.

Average total cost and frequency of data breaches by initial attack vector
Source – Cost of a Data Breach Report by Ponemon and IBM for 2021

In 2021, the top five most costly data breach attack vectors were:

  • $5.01 million lost due to a breach of business email
  • $4.65 million in phishing
  • $4.61 million – malicious insiders
  • $4.47 million in social engineering attacks
  • $4.33 million in vulnerabilities in third-party software

How much did human errors and system flaws cost for data breaches?

Because compromised credentials were the most prevalent starting attack vector in 2021, data leaks are anticipated to account for the bulk of breaches investigated in this research. User credentials are frequently involved in data breaches, and these unintended exposes are commonly caused by human mistakes.

Phishing and social engineering attacks are facilitated mainly by human mistakes. Due to its broad attribution, the cost of a data breach caused by a human error may be determined roughly by computing the average cost across all four data breach events – business email compromise, credential compromise, phishing, and social engineering.

How Data Breaches Affecting Different size Businesses?

Organizations with 500 to 1000 employees had the lowest average data breach cost in 2021, at $2.63 million.

Average cost of a data breach by employee headcount
Source – Cost of a Data Breach Report by Ponemon and IBM for 2021

Surprisingly, the average data breach cost for businesses with up to 500 employees was $2.98 million. Businesses with 10,000 to 25,000 workers had the highest average data breach expenses, totaling $5.52 million.

What are the most significant cost amplifiers of data breaches?

The following were the most significant cost drivers for data breaches:

  • Over 50 million records were compromised, resulting in a 100x increase in data breach expenses.
  • Data breach costs increased by $750,000 over the average due to a lack of digital transformation measures in response to COVID-19.
  • Remote work styles resulted in a 58-day increase in breach lifecycle.
  • Due to a lack of security automation, possible data breach cost savings of up to 80% were prevented.

What Reduces the Cost of a Data Breach?

A reduced average data breach cost was linked to extensive usage of encryption, data loss prevention, threat intelligence sharing, and DevSecOps.

Encryption has the most beneficial influence of all of them. The average breach costs $3.62 million for companies with high-standard encryption methods (at least 256 AES encryption).

The average data breach cost for organizations utilizing a low-standard encryption technology or no encryption approach was $4.87 million.

How do incident response teams and penetration testing impact the costs?

The average cost of a data breach was reduced by $1.83 million ($5.71 million versus $3.88 million) for organizations that could respond successfully to a data breach, regularly used penetration testing services, and followed a well-rehearsed incident response strategy.

Do Automated Security Processes Lower the Costs of Data Breaches?

Data breach expenses were decreased by up to 80% in organizations that used security automation technology. Organizations that did not use security automation technologies spent an average of $6.71 million for a data breach, compared to $2.90 million for those that did.

Average cost of a data breach by security automation deployment level
Source – Cost of a Data Breach Report by Ponemon and IBM for 2021

The cost of not using automation is rising. With no automated tools, the average cost of a data breach increased from $5.16 million in 2019 to $6.71 million in 2021.

Look for software that can track and evaluate your providers’ security performance over time and against industry benchmarks.

What are the Odds of Experiencing a Data Breach?

In 2019, the likelihood of having a data breach increased to 29.6%, up from 27.9% in 2018.

The chance of a data breach within two years increased by seven percentage points in six years, with a 31 percent rise in the probability of a breach within two years.

In other words, your company is roughly a third more likely to be hacked in the next two years than in 2014.
Company owners must be aware of all potential risks in the constantly evolving world of data security. The following are the forecasted cybersecurity incidents in the following years.

What are the statistics so far for data breaches in 2022?

Cybercrime is expected to cost $10.5 trillion globally by 2025, with an annual increase of 15%. (Cybersecurity Ventures)

Attackers will focus on biometric hacking, exposing flaws in touch ID sensors, facial recognition, and passcodes. (Experian)

Skimming isn’t new, but the next frontier might include an enterprise-wide attack on a big financial institution’s nationwide network, resulting in millions of dollars in losses. (Experian)

Most likely a major cellular provider would be targeted simultaneously on iPhones and Androids. Cybercriminals might steal personal information from millions of users, even disrupting all cellular connections in the US. (Experian)

A cyberattack on a cloud vendor might compromise the sensitive information of hundreds of Fortune 1,000 businesses. (Experian)

The online gaming community will be an expanding hacker surface, with attackers acting as gamers and getting access to trusted users’ PCs and personal data. (Experian)

Can Penetration Testing Help Prevent Data Breaches?

Yes, penetration testing should be a tool that every organization uses to find vulnerabilities, view gaps in your security policies, and strengthen your security posture.

Artifice Security will show real-world attacks on your network, devices, web applications, infrastructure, and staff to uncover your hidden security vulnerabilities and provide you with the measures you need to improve your security posture.

Our highly educated cybersecurity staff has worked in a variety of industries throughout the world, including technology, energy, education, financial services, government, and the public sector. Our team uses only senior-level consultants who understand your network’s nuances and applications as a top-rated veteran-owned penetration testing firm. Artifice Security experts have decades of IT and security expertise and hundreds of penetration tests under their belts and are regarded as industry leaders.

Artifice Security will guarantee that every evaluation is custom-tailored to match your needs, whether you are a Fortune 500 corporation or a small business. Our worldwide customers keep returning to Artifice Security because they need a cybersecurity firm with ethics, expertise, and understanding to keep them safe.

Looking to get started with the first steps on securing your network and applications? Contact us now or book a meeting to get started.

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