Data breaches are becoming an expensive predicament for all of us, even if your data isn’t directly stolen in a breach.
The latest IBM 2024 Cost of a Data Breach Report, released in July, reveals that when companies suffer these breaches, they often pass the hefty costs onto their customers. And data breaches are becoming extremely pricey, especially for small and medium sized businesses.
The cost of data breaches
According to the report, the global average cost of a data breach in 2024 has skyrocketed to $4.88 million! That’s a staggering 10% jump from the previous year! This study was carried out by the Ponemon Institute and sponsored and analyzed by IBM. It took a deep dive into data breaches at 604 organizations worldwide. They talked to over 3,500 security and business leaders who lived through these breaches to get the inside scoop.
Why are data breaches so expensive? Lost business, including downtime and customers going elsewhere, is a huge factor driving the increase. So is the cost of responding to the breach, including staffing up customer service help desks and regulatory fines for failing to protect data.
Who pays the price? You do.
Here’s where it gets personal: more than half of the organizations hit by data breaches pass those costs directly to consumers by charging more for goods and services. That’s right, when a company gets hacked, most will raise their prices to cover the damages. This year, 63% of businesses said they’re upping prices because of data breaches, compared to 57% last year. While many factors contribute to products becoming more expensive, data breaches are part of the equation in many cases now.
The human factor
One big reason these breaches are so costly is that cybersecurity teams are often understaffed. Over half of the companies surveyed said they’re struggling with severe staffing shortages in their security departments. And as companies rush to adopt new AI technologies, the pressure on these already overwhelmed teams is only increasing.
What are hackers stealing?
The report found that nearly half (46%) of all data breaches involve customer personal information like Social Security numbers, emails, phone numbers, and home addresses. Intellectual property, like trade secrets, was stolen in 43% of breaches.
The financial fallout
The costs associated with data breaches aren’t just about fixing the security hole. Businesses hemorrhage money due to system downtime, losing customers, and damaging their reputation. They also spend big on setting up call centers, providing credit monitoring services, and paying regulatory fines. This year, these lost business and response costs totaled a whopping $2.8 million per breach, the highest in the last six years.
What helps and what hurts
The report also examined what factors can make these costs go up or down.
What saved money?
- Employee training
- Using AI to catch threats early and make responses faster
What increased costs?
- Complex security systems
- Not having enough skilled security staff
- Breaches via third-party vendors (like supply chains) were top cost drivers
What can we do?
Understanding the dynamics of data breaches and increased customer prices is crucial. Businesses need to invest in strong cybersecurity measures and train their employees well. Making security systems easier for everyone to understand and addressing the cybersecurity skills gap can also help reduce the impact of breaches. The 2024 report is a stark reminder of how interconnected our economy is and why robust cybersecurity is more important than ever.
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