The average cost of a data breach for companies surveyed has grown to $4 million, representing a 29% increase since 2013, according to IBM.
A study done by Ponemon Institute and commissioned by IBM found that cybersecurity incidents continue to grow in both volume and sophistication, with 64% more security incidents reported in 2015 than in 2014.
As these threats become more complex, the cost to companies continues to rise. In fact, the study 2016 Cost of Data Breach Study found that companies lose $158 per compromised record. Breaches in highly regulated industries were even more costly, with healthcare reaching $355 per record – a full $100 more than in 2013.
According to the study, leveraging an incident response team was the single biggest factor associated with reducing the cost of a data breach – saving companies nearly $400,000 on average (or $16 per record).
Response activities like incident forensics, communications, legal expenditures and regulatory mandates account for 59% of the cost of a data breach. Part of these high costs may be linked to the fact that 70% of US security executives report they don’t have incident response plans in place.
The process of responding to a breach is extremely complex and time consuming if not properly planned for.
Among the required activities, IBM said a company must work with IT or outside security experts to quickly identify the source of the breach and stop any more data leakage.
Companies should also disclose the breach to the appropriate government/regulatory officials, meeting specific deadlines to avoid potential fines, and communicate the breach with customers, partners, and stakeholders.
Firms also need to set up any necessary hotline support and credit monitoring services for affected customers.
The study also found the longer it takes to detect and contain a data breach, the more costly it becomes to resolve. While breaches that were identified in less than 100 days cost companies an average of $3.23 million, breaches that were found after the 100 day mark cost over $1 million more on average ($4.38 million).
The average time to identify a breach in the study was estimated at 201 days, and the average time to contain a breach was estimated at 70 days.