Cost of a data breach: from price increases to lost businesses

When it comes to data breaches, consumers expect companies to bear the losses. But quite often, buyers get affected, as well.

The 2022 Cost of a Data Breach Report analysed hundreds of organizations globally across the industries to learn more about the costs incurred due to data breaches. The research was conducted by the Ponemon Institute and analyzed by IBM Security,

Out of the 550 investigated organizations, 83% were impacted by a data breach on more than one occasion.

In 60% of the cases, a data breach resulted in price increases for customers, with an average total cost of a breach standing at $4.35 million in 2022. The amount accounts for a 2.6% increase from last year or a worrying 12.7% from 2020.

The associated costs were broken down into four categories: lost business, detection

and escalation, notification, and post breach response. In 2022, detection and escalation became the costliest aspect – up from lost business, which was considered the costliest for the past six years.

The healthcare field lost the most money due to data breaches ($10.10 million,) followed by the financial, pharmaceuticals, technology, and energy industries.

Similarly to 2021, use of stolen or compromised credentials remains the preferred attack vector in data breaches. Such incidents took the longest to identify and contain, costing organizations on average $4.50 million. Phishing followed closely and turned out to be the most expensive cause of a breach.

In the event of a breach, remote work also worsens the overall outlook for organizations. On average, the factor of remote work in causing a breach skyrocketed the costs for companies by $1 million.

Overall, the United States continues to top the list of the countries with the most expensive data breaches (on average, $9.44 million) for 12 years in a row. Other countries included in the top five were Canada at $5.64 million, the United Kingdom at $5.05 million, and Germany at $4.85 million.

The report’s findings highlight the utility of security AI and automation. Those organizations that deployed such tools paid $3.05 million less during breaches and spent on average 74 fewer days to identify and contain the breach.

"Businesses need to put their security defenses on the offense and beat attackers to the punch. It's time to stop the adversary from achieving their objectives and start to minimize the impact of attacks. The more businesses try to perfect their perimeter instead of investing in detection and response, the more breaches can fuel cost of living increases." said Charles Henderson, Global Head of IBM Security X-Force.