What Does a Cyber Breach Cost to Fix in 2024?

With the threat of stolen data, ransomware attacks, and worries over AI scams looming, cybersecurity is an obvious must.

Many businesses are pressured to spend their IT budgets on cybersecurity tools. This is often done using scare tactics. You may question what the alternative is. Would the cost of a breach be easier to absorb than any ongoing cybersecurity expenses?

To learn about the typical cost breakdown of managed IT services, you can check out our guide here. However, if you're curious about the actual costs associated if you were to suffer a data breach, here's an overview of what you can expect.

What is the Real Cost of Cyber Breaches?

The true cost of any cyber breach is hard to nail down to a guaranteed price. This is because some attacks are more detrimental than others. For example, a phishing scam that tricks an intern into purchasing gift cards would only be a small financial hit to your business.

On the other hand, a more widespread attack could leave your business's, vendors', staff's, or clients' sensitive data vulnerable in the hands of cybercriminals. This would involve much more strategy and disaster recovery expenses than minor breaches.

For larger attacks, there are several factors that can determine an end cost for a single breach. These elements could include ransomware payments, forensics services, government and victim notification, public relations expenses, government fines, or legal fees.

1. Ransomware & Negotiation

A ransomware attack could take over your entire business network, shutting down operations for days. The loss in revenue from stalled operations can be hard to pinpoint.

Yet, some attacks have led to industry-wide hits like the CDK attack on the automotive industry in June 2024. In that case, a single service taken down by cyber attackers led to an estimated 2-7% loss in revenue from new vehicle sales across US dealerships.

Hackers may demand large ransom payments to give you back your data or assets, and these demands are often in the millions. According to the IBM Security Cost of a Data Breach report in 2023, the average total cost of a cyber breach was $4.45 million.

Some businesses even offer services to help with ransomware negotiation, which can significantly reduce required payment sums to cyber criminals. Through these services, you can also extend payment deadlines to give your incident response team more time to make a game plan.

However, before you go ahead and pay hackers, remember your problems may not stop there, either. Some US policies prohibit payments to certain foreign states, where cyber criminals tend to come from.

Learn more about what to if you're faced with ransomware in our blog: To Pay or Not to Pay: How to Handle Ransomware Negotiation

2. Cyber Forensics Costs & Notification

Many cyber insurance companies include cyber forensics as a part of their coverage, and for good reason. The first steps you must take once you become aware of a breach are to investigate the size and severity of the event and notify the necessary parties.

Cyber forensics teams will investigate the source of the breach, look for any viable data backups, and help you evaluate your options. They can uncover details like the scope of data lost, who is likely affected, and what went wrong to lead to the breach.

There are many services designed for disaster recovery that often call themselves Disaster Recovery as a Service (DRaaS). To read more about reactive cybersecurity services vs proactive measures, check out our blog: Incident Response vs Disaster Recovery: What's the Difference?

In addition to engaging in disaster recovery, you must also notify victims sooner rather than later. In fact, most US states have laws in place surrounding cyber breach notification. Many states require businesses to notify all affected parties as well as regulatory entities as soon as possible after the cyber event.

Notification may involve sending out letters, emails, or other communications to all affected victims. If you don't notify victims in a timely manner, there could be other financial and legal consequences down the line.

3. Long-Term Public Relations & Reputational Recovery

It goes without saying that consumers are unlikely to choose your products or services if they don't trust you to protect their data. In the age of rampant cyber attacks, it's nerve-wracking to place your sensitive data in the hands of companies that may not protect it from cyber threats.

Because of this, businesses that fall victim to cyber-attacks often feel the effects of breaches long afterthey are resolved. Your business's reputation is everything, and it only takes one breach of your client's sensitive information to lose their trust for good.

Public relations and reputational repair through strategic press and outreach can get pricey fast.

4. Costs of Lawsuits and Fines

States like New York are taking action against cyber negligence. In 2023, for example, Attorney General James fined a healthcare company over $300,000 following a breach. This company did not have enough cybersecurity, and failed to take the right steps after a breach was discovered.

Along with large fines, lawsuits are common against businesses that fail to protect their clients' or vendors' sensitive data. In light of this, you may find yourself juggling legal troubles all while trying to recover from the other tangible and intangible damage to your business.

Cyber insurance policies may cover part or all of these expenses, so it's wise to consult with your insurance provider during your incident response planning. On average, insurance can help businesses cover around 51% of consulting and legal services if claims are accepted.

To read more about how the law ties into cybersecurity, read our article: Can My Business Get Sued for a Cybersecurity Breach?

What Are the Most Common Causes of Data Breaches?

By far, the biggest threat to your organization's cybersecurity is human error. After all, the easiest way for threat actors to gain access to your network is by simply asking nicely.

Social Engineering Causing Major Cyber Security Breaches

Phishing emails and other social engineering tactics take advantage of staff who might not recognize the warning signs of unsafe emails or messages. Other variants include:

• Vishing (fraudulent phone calls)
• Smishing (texts or SMS messaging scams)
• Quishing (QR codes leading to malicious sites)
• Pharming (Website spoofing)

They're more pervasive than one might think, as some of the largest cyber security breaches in recent history were caused by social engineering. For example, the MGM attack in Las Vegas in 2023 shut down an entire hotel and casino network because a phone operator unknowingly let a hacker into their network.

These attacks have become much harder to spot, too. Gone are the days when scams were easily identifiable by spelling mistakes or obvious attempts to steal your credit card information. Now, hackers use AI to generate very real-sounding emails, texts, and even phone calls using AI voice impersonation.

Learn more about how to spot phishing in our blog: SLAM Dunk Your Email Security with These 4 Rules to Live By (usherwood.com)

Endpoint Security Is Crucial To Your Cyber Strategy

Poor endpoint security is another major threat to information security. In fact, 70% of data security breaches originate from network endpoints according to a survey by IDC. Network endpoints refer to any devices connected to your server. These can include:

• Printers
• Copiers
• Multifunction devices
• Digital healthcare devices
• Tablets, phones, and other handheld devices

These devices often don't come with the same cybersecurity protections that computers come with. This is why you'll want to both secure your devices and consider purchasing technology that is secure by design.

To learn more about how to approach endpoint security for your print environment, read our blog: How Important is Printer Security?

Find Services To Help With Incident Response Planning

It's more important than ever to invest in quality IT support, network management, and cybersecurity solutions. IT outsourcing providers have the resources and staff to help you keep up with the latest cyber threats to your industry. To learn about some of the tools data security companies implement to combat cybercrime, read our blog: Are You Using These 7 Essential Cybersecurity Tools?

If you're ready to explore your existing cybersecurity gaps and find solutions to secure your network, click the button below to speak with an expert about your business.