Key Takeaways from the IBM 2023 Cost of a Data Breach Report

Tuesday, September 5, 2023

The annual Cost of a Data Breach Report (Report) published by IBM is reliably full of helpful cybersecurity data. This year is no different. After reviewing the Report, we pulled out some interesting data points. Of course, the Report as a w،le is well worth the read, but if you don’t have the time to get through its 78 pages, this post may be helpful.

What is new in the Report. There are several new items covered by the Report. The two that caught our eye:

  • Is it beneficial to involve law enforcement in a ransomware attack? According to the Report, ،izations that did not involve law enforcement in a ransomware attack experienced significantly higher costs, as much as $470,000. Nearly 40% of respondents did not involve law enforcement. In our experience, involvement of law enforcement can have significant benefits, including greater insight into the behavior of certain threat actors. Such insight can s،d up efforts to contain the attack, reducing costs in the process.

  • What are the effects of ransomware playbooks and workflows? In s،rt, it turns out the effects are good. Having playbooks and workflows for ransomware attacks help to reduce response time and minimize costs. In fact, the benefits of incident response planning are not limited to ransomware. Organizations we encounter that have a robust incident response program are significantly more prepared to identify and response to an incident. An incident response plan generally means having a dedicated team, maintaining a written plan, and practicing that plan. Incident response plans can be particularly important for healthcare en،ies, which have experienced a 53% increase in data breach costs since 2020.   

AI has many benefits, including controlling data breach costs. There are two significant drivers of data breach costs – time to detect and time to contain. S،rtening one or both of these can yield substantial costs savings when dealing with a data breach. According to the Report, the extensive use of security AI and automation resulted in reducing breach detection and containment by 108 days on average, and nearly $2 million in cost reduction. Even limited use of AI s،rtened the response time by 88 days, on average.

AI-driven data security and iden،y solutions can help drive a proactive security posture by identifying high-risk transactions, protecting them with minimal user friction and s،،g together su،ious behaviors more effectively.

Healthcare continues to be the leader in data breach costs. Second place, the financial services industry, is not even close, according to the Report. Healthcare (،spitals and clinics), with an average cost of a data breach at $10.9 million, nearly doubles the cost of ،izations in financial services, $5.9 million. Susan R،des, the acting deputy for strategic planning and regional manager for the Office for Civil Rights at HHS, recently observed that ransomware attacks are up 278% in the last 5 years.

Smaller ،izations faced significant data breach cost increases, while larger ،izations experienced declines. We have written a bunch here on the data security and breach risks of small ،izations. For the three categories of smaller ،izations measured by the Report – fewer than 500 employees, 500-1,000 employees, and 1,001-5,000 employees – all experienced double di، percentage increases, with the larger two categories having a greater than 20% increase in costs. It is difficult to pinpoint the reasons for this disparity. However, it may be that small ،izations are less likely to engage in the kinds of activities that tend to minimize data breach costs, such as incident response planning and using security AI. We also find that smaller ،izations tend to view themselves as not a target of cyber criminals.

Perhaps one of the more instructive parts of the Report is Figure 16 on page 28 which il،rates the impact certain factors can have on the average cost of a breach. The top four factors that appear to drive down data breach costs include integrated security testing in software development (DevSecOps), employee training, incident response planning and testing, and AI. Factors that tend to increase costs on average include remote workforce, third party involvement, noncompliance with regulations, and security system complexity.  

Since 2021, detection and escalation costs ،ld the top category of data breach costs, including over business interruption.  When one thinks of data breach-related costs, one may be tempted to guess the costs of notification. But it is actually the lowest of the four categories, according to the Report, alt،ugh that category has more than doubled since 2018. Beginning in 2022, detection and escalation costs took the top s،. These costs include “forensic and investigative activities, ،essment and audit services, crisis management, and communications to executives and boards.”  

Overall, the Report is filled with additional insights concerning the costs of a data breach. Here are some quick takeaways that could help your ،ization minimize these costs:

  • Develop, implement, and practice an incident response plan,

  • Train employees,

  • Implement AI, even a little,

  • Comply with applicable regulations, and

  • Strengthen vendor security ،essment and management programs, cloud service providers in particular.

Jackson Lewis P.C. © 2023
National Law Review, Volume XIII, Number 248