What are the real costs to a company of a data breach?
By: William Sikkens
Host, User Friendly 2.0 Saturday’s at 5:00 p.m.
A data breach can be a devastating experience for any business, especially in the United States. With the rising frequency of cyber attacks, data breaches have become a significant concern for businesses of all sizes. These breaches can expose sensitive information such as personal data, financial information, and confidential company data. The financial cost of a data breach can be staggering and can have a lasting impact on a business’s reputation. In this article, we will explore the cost of a data breach to a business in the United States.
So what exactly is a Data Breach?
A data breach is a security incident that occurs when an unauthorized person gains access to sensitive or confidential information. This information can be anything from personal data, financial information, and intellectual property to confidential company data. The breach can occur due to various reasons such as hacking, malware, phishing, or physical theft.
The cost of a data breach can vary depending on various factors such as the type of breach, the number of records affected, the industry, and the size of the business. In general, the cost of a data breach can be divided into two categories: direct and indirect costs.
The direct costs of a data breach are those that directly result from the breach. These costs include:
Notification Costs when the affected individuals and regulatory bodies must be notified. The notification process can be expensive and time-consuming. Depending on the state, companies may be required to provide credit monitoring services or identity theft protection to the affected individuals. The cost of notification can vary, but it is estimated to be around $0.50 to $5 per record.
Investigation and Remediation Costs occur when the business must investigate the breach to identify the cause and take necessary steps to prevent future breaches. This process can be time-consuming and expensive. The cost of an investigation can vary depending on the extent of the breach and the size of the business. Remediation costs include the cost of repairing or replacing hardware and software affected by the breach.
Legal Costs can result in lawsuits filed by affected individuals or regulatory bodies. The cost of legal fees and settlements can be significant, depending on the nature of the lawsuit and the size of the business.
Indirect Costs of a data breach are those that result from the breach but are not directly related to the breach. These costs include:
Reputation Damage from a data breach can ruin a business’s reputation and erode customer trust. This damage can result in a loss of revenue and long-term harm to the business’s brand.
Loss of Business happens when customers may choose to take their business elsewhere after a data breach. This loss of business can be significant, especially for small businesses.
Decreased Employee Productivity from a data breach can cause significant disruption to a business’s operations, leading to decreased employee productivity. Employees may be required to participate in the investigation and remediation process, which can take their focus away from their regular duties.
Regulatory Fines can be issued to businesses that fail to comply with data protection laws and regulations. These fines can be significantly substantial, especially for larger businesses.
According to the 2021 Cost of a Data Breach Report by IBM, the average cost of a data breach in the United States is $9.05 million. The report also found that the average cost per record in the United States is $242, which is higher than the global average of $150. The report found that the healthcare industry has the highest cost per record at $9,751, while the retail industry has the lowest cost per record at $139.
Join us on User Friendly 2.0 as we discuss this further and give some tips on how to avoid this from happening to your company.
William (Bill) Sikkens has been an on-air technology expert since 2013. With an expertise in I.T., cyber security and software design he has had more than 20 years’ experience with advanced technology. Sikkens conceptualizes and designs custom applications for many professional industries from health care to banking and has the ability to explain the details in a way all can understand. Article edited by Gretchen Winkler, who along with Jeremy Winkler are the co-hosts of User Friendly 2.0 here on The Answer Saturdays at 5:00 p.m.
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