Security is a hot-button topic for businesses of all sizes, but the discussion is rapidly moving away from traditional security measures and into cybersecurity. A single cyber attack can cripple an organization and leave it cleaning up the mess and dealing with expenses for years, so developing a mitigation strategy is essential.
Understanding how much a data breach can cost a company is another essential step in the process because the losses can be staggering. The expenses associated with cyber attacks are growing every year, too, turning cybersecurity into a critical service for all businesses.
The cost of cyber attacks isn’t something any business will want to ignore. This guide examines how much money data breaches cost companies annually and looks at some cybersecurity trends to watch for in 2023.
The Cost of Cyber Attacks
IBM predicts that 83% of all businesses will experience a data breach at some point, so completely avoiding this problem is becoming increasingly unlikely. Each attack will bring significant expenses to the company it targets, although the exact amount varies. Some information you should have about the cost of data breaches includes the following:
Annual Costs
A report by Statista estimates that cybercrime cost worldwide businesses and consumers $8.44 trillion in 2022. That number seems massive enough, but it could grow to $11.50 trillion in 2023 and $23.82 trillion by 2027, surpassing the United States’ latest GDP. Cybercriminals target new organizations daily, and all companies should have a security strategy in place to reduce their risks and minimize their losses.
Average Costs
The average cost of data breaches varies by location and industry. A breach costs an average of $4.35 million globally, according to the IBM data, but that number balloons to $9.44 million when looking exclusively at American companies. The healthcare industry experiences the most expensive data breaches, averaging $10.1 million per attack.
Most Common Targets
About 45% of all data breaches occur in the cloud, as that’s where attackers are focusing much of their energy. The average attack on a private cloud costs organizations $4.24 million, while firms with public clouds average losses of $5.02 million. A hybrid cloud model can reduce organizational losses, as the average data breach costs companies $3.8 million.
These statistics show where losses are occurring and how much they can cost businesses of all types. The numbers will also drive the next generation of cybersecurity products that attempt to manage the damages cyber crime causes.
Five Cybersecurity Trends to Watch in 2023
The cybersecurity industry is often reactionary as firms develop unique technologies to address the areas cybercriminals are currently targeting. We could see new cybersecurity trends appear in 2023 as a direct response to the cost of data breaches and the techniques cybercriminals are deploying. Some trends to watch for in the coming year include the following:
1. Prioritizing Earlier Containment
Immediately containing a data breach can minimize the damage it does to an organization. The problem is that it takes an average of 277 days for companies to recognize a data breach and an additional 70 days to contain it, leaving plenty of time for damage to occur. Cybersecurity firms have developed significant identification and containment advancements in the last few years, but more focus will be necessary in 2023 and beyond.
2. Focusing on Ransomware
Ransomware attacks take an average of 49 days longer to identify and contain than other methods, which is one reason the average incident costs $4.54 million. These attacks are becoming more prevalent, too, increasing in volume by 41% between 2021 and 2022. We could see cybersecurity firms focusing more of their energy on ransomware in 2023 because of the damage it can do to company systems.
3. Identifying Specific Vulnerabilities
Cybersecurity technology is becoming increasingly specialized, and that trend should continue in 2023 as developers focus on the vulnerabilities criminals are targeting. About 19% of data breaches result from compromised credentials, 16% are via phishing schemes, 15% are because of cloud misconfiguration, and 13% are from issues with third-party software, so those areas could use some attention. There’s a good chance developers will work to fix some of those problems, but new issues will surely arise in response.
4. Using Artificial Intelligence
Artificial intelligence (AI) and automation can offer significant cost savings for businesses using them as cybersecurity tools. Firms identify and contain data breaches an average of 74 days sooner by using this technology and save an average of $3.05 million per incident. There’s a good chance startups will integrate more AI capabilities into their software offerings in 2023 and beyond to save their customers money and offer a more rapid response to breaches.
5. Testing the Plan
Businesses implementing a cybersecurity strategy should test their plans as frequently as possible. Testing ensures these companies can identify weaknesses in their cybersecurity procedures and make the necessary adjustments. The average cost of cyber attacks decreases by about $2.66 million for companies that test their method compared to those that don’t.
Cybersecurity is continually evolving, and these trends might not stick around for long, but they should see a focus in 2023. Any cybersecurity startup looking to gain footing in the market could consider these areas as a starting point for their software offerings.
Funding for Cybersecurity Startups
Cybercrime breaks new records annually and will continue costing businesses all over the globe significant amounts of money for the foreseeable future. These expenses are part of doing business in 2023, but that doesn’t mean organizations should ignore cybersecurity and the cost savings it provides. The sheer number of breaches and their costliness should also open up new opportunities for startups looking to break into the industry.
Option3 is a cybersecurity investment firm that brings startups together with industry-savvy investors. We understand the cybersecurity space inside and out and look to identify service providers filling a need in the industry. Contact Option3 for more information on the cost of cyber attacks or to learn more about our investment portfolios.