We read about a high profile cyber attack in national media outlets on a weekly basis, but data breaches on the scale of Target and The Democratic National Committee are hard to relate to when you run an organization with less than 100 people.
According to the annual data breach report by IBM and the Ponemon Institute, the average cost of a cyber attack has risen to $4,000,000 per incident. That's a 30% increase since 2013. As a result, organizations are increasing their spending on data breach prevention. Deloitte, a leader in cyber risk consulting, has issued a new report that points out the hidden costs of responding once a breach has occurred.
According to the Journal of Accountacy, the report lists 14 impact factors of a cyber attack, including 7 "beneath the surface" costs that are hard to quantify. Among these are:
- Insurance Premium Increases - your organization may be denied coverage, or you could see increases as high as 200% for the same coverage you had!
- Increased Cost of Debt - organizations often receive credit downgrades as a result of a breach. Target's debt was downgraded in the wake of their cyber attack.
- Operational Disruption or Destruction - you'll be focusing on things that don't make you money.
- Lost Contract Revenue - Contracts are terminated and contract negotiations are harder in the wake of a breach.
- Lost or Tarnished Customer Relationships - customer attrition increases 30% in the wake of a cyber attack.
- Devaluation of Trade Name - brand loyalty declines in light of perceived weakness.
- Loss of Intellectual Property - this impact can last decades.
What are you doing to manage your risk?