The True Cost of Data Breaches Explained
A good risk management strategy aims to proactively control risk within an organisation, rather than reactively responding after the fact. On the topic of data breaches, proactive due diligence and risk management are far superior to letting the breach occur and dealing with it thereafter.
Data breaches have not only increased worldwide since the start of the 21st century in quantity, but they’ve also ballooned to multiple millions of dollars for many large corporations and even for smaller firms as well.
How Much Does a Data Breach Cost?
A heck of a lot. A data breach exposing thousands of sensitive data records can easily cost millions of dollars, but of course the total cost will largely depend on:
The severity of the breach: how many records were exposed?
Data security laws: fines for data breaches depend on the jurisdiction. In Australia, fines can cost up to $2.1 million although the idea of harsher, $10 million minimum fines have been proposed as well.
Opportunity cost: the potential revenue that you may have expected for the coming quarter or year will likely decrease, sometimes significantly, due to frustrated customers no longer trusting and thus buying your product or service.
Legal fees: legal representation, audits, and data task forces to revise and enforce new data security policies all add up quite a bit.
Average Cost of a Data Breach
IBM estimated that the average cost of a data breach worldwide in 2020 was about $3.86 million USD, which works out to about $5 million AUD. Notably, the United States had an average data breach cost of a staggering $8.64 million, making it the single costliest country in which to suffer a data breach.
In the coming years and decades, as more and more businesses rely on data analytics and the power of big data to provide superior services and customer service, chances are the cost and severity of data breaches will multiply to even higher figures. Add in increasingly stringent government legislation to protect customer privacy and the idea of $10 million fines doesn’t sound too far off.
How to Mitigate and Reduce the Risk of Data Breaches
First and foremost, a robust data security policy must be in place. Not only for large corporations but also for small and medium-sized enterprises that are increasingly dealing with more and more data.
Also evaluate how your organisation disposes of hard drives and IT assets. More and more businesses are relying on professional IT asset disposition (ITAD) services to securely shred and destroy IT assets, thus rendering the data therein irretrievable. This eliminates a major source of data breaches.
Lastly, ensure that your risk management team are aware of all the risks pertaining to data security within the organisation. How is data collected? Stored? Shared? What is your company’s data retention policy? Does your website have GDPR-compliant cookie consent popups (i.e. opt-in for cookie tracking)?
How is your organisation managing risk? The robust risk management software from Risk Wizard provides organisations with superior functionality, tracking, and risk assessment reporting that is up to the task of managing risk for the 21st century. Give it a go today.
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