IBM Reports Cost of a Data Breach Hits Record High During Pandemic

2024-04-18 05:47:41 Technology

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July 28, 2021 ? IBM Security announced the results of a global study which found that data breaches now cost surveyed companies $4.24 million per incident on average ? the highest cost in the 17-year history of the report. Based on in-depth analysis of real-world data breaches experienced by over 500 organizations, the study suggests that security incidents became more costly and harder to contain due to drastic operational shifts during the pandemic, with costs rising 10% compared to the prior year.

Businesses were forced to quickly adapt their technology approaches last year, with many companies encouraging or requiring employees to work from home, and 60% of organizations moving further into cloud-based activities during the pandemic. The new findings released today suggest that security may have lagged behind these rapid IT changes, hindering organizations? ability to respond to data breaches.

The annual Cost of a Data Breach Report, conducted by Ponemon Institute and sponsored and analyzed by IBM Security, identified the following trends amongst the organizations studied:

Remote work impact: The rapid shift to remote operations during the pandemic appears to have led to more expensive data breaches. Breaches cost over $1 million more on average when remote work was indicated as a factor in the event, compared to those in this group without this factor ($4.96 vs. $3.89 million.)

Healthcare breach costs surged: Industries that faced huge operational changes during the pandemic (healthcare, retail, hospitality, and consumer manufacturing/distribution) also experienced a substantial increase in data breach costs year over year. Healthcare breaches cost the most by far, at $9.23 million per incident ? a $2 million increase over the previous year.

Compromised credentials led to compromised data: Stolen user credentials were the most common root cause of breaches in the study. At the same time, customer personal data (such as name, email, password) was the most common type of information exposed in data breaches ? with 44% of breaches including this type of data. The combination of these factors could cause a spiral effect, with breaches of username/passwords providing attackers with leverage for additional future data breaches.

Modern approaches reduced costs: The adoption of AI, security analytics, and encryption were the top three mitigating factors shown to reduce the cost of a breach, saving companies between $1.25 million and $1.49 million compared to those who did not have significant usage of these tools. For cloud-based data breaches studied, organizations that had implemented a hybrid cloud approach had lower data breach costs ($3.61m) than those who had a primarily public cloud ($4.80m) or primarily private cloud approach ($4.55m).
?Higher data breach costs are yet another added expense for businesses in the wake of rapid technology shifts during the pandemic,? said Chris McCurdy, Vice President and General Manager, IBM Security. ?While data breach costs reached a record high over the past year, the report also showed positive signs about the impact of modern security tactics, such as AI, automation and the adoption of a zero trust approach ? which may pay off in reducing the cost of these incidents further down the line.?

Impact of Remote Work and Shift to Cloud on Data Breaches

With society leaning more heavily on digital interactions during the pandemic, companies embraced remote work and cloud as they shifted to accommodate this increasingly online world. The report found that these factors had a significant impact on data breach response. Nearly 20% of organizations studied reported that remote work was a factor in the data breach, and these breaches ended up costing companies $4.96 million (nearly 15% more than the average breach).

Companies in the study that experienced a breach during a cloud migration project had 18.8% higher cost than average. However, the study also found that those who were further along in their overall cloud modernization strategy (?mature? stage) were able to detect and respond to incidents more effectively ? 77 days faster on average than those who were in early-stage adoption. Additionally, for cloud-based data breaches studied, companies that had implemented a hybrid cloud approach had lower data breach costs ($3.61m) than those who had a primarily public cloud ($4.80m) or primarily private cloud approach ($4.55m).

Compromised Credentials a Growing Risk

The report also shed light on a growing problem in which consumer data (including credentials) is being compromised in data breaches, which can then be used to propagate further attacks. With 82% of individuals surveyed admitting they reuse passwords across accounts, compromised credentials represent both a leading cause and effect of data breaches, creating a compounding risk for businesses.

Personal Data Exposed: Nearly half (44%) of the breaches analyzed exposed customer personal data, such as name, email, password, or even healthcare data ? representing the most common type of breached record in the report.
Customer PII Most Costly: The loss of customer personal identifiable information (PII) was also the most expensive compared to other types of data ($180 per lost or stolen record vs $161 for overall per record average).

Most Common Attack Method: Compromised user credentials were the most common method used as an entry point by attackers, representing 20% of breaches studied.
Longer to Detect & Contain: Breaches resulting from compromised credentials took the longest to detect ? taking an average of 250 days to identify (vs. 212 for the average breach.)

About IBM Security

IBM Security offers one of the most advanced and integrated portfolios of enterprise security products and services. The portfolio, supported by world-renowned IBM Security X-Force? research, enables organizations to effectively manage risk and defend against emerging threats. IBM operates one of the world's broadest security research, development and delivery organizations, monitors 150 billion+ security events per day in more than 130 countries, and has been granted more than 10,000 security patents worldwide.