IBM & Ponemon Institute Study: Data Breach Costs Rising, Now $4 million per Incident Results Show “Time is Money” When Responding to a Data Breach Incident Response Teams Lead to Significant Cost Savings

SINGAPORE
– 16 Jun 2016 – IBM Security (NYSE: IBM)
today announced the results of a global study analyzing the financial impact of
data breaches to a company’s bottom line. Sponsored by IBM and conducted by the
Ponemon Institute, the study found that the average cost of a data breach for
companies surveyed has grown to $4 million, representing a 29 percent increase
since 2013.

Cybersecurity
incidents continue to grow in both volume and sophistication, with 64 percent
more security incidents reported in 2015 than in 2014.1 As
these threats become more complex, the cost to companies continues to rise. In
fact, the study2found that companies lose $158 per compromised
record. Breaches in highly regulated industries were even more costly, with
healthcare reaching $355 per record – a full $100 more than in 2013.

Slow
Response and Lack of Planning Cost Companies Millions

According
to the study, leveraging an incident response team was the single biggest
factor associated with reducing the cost of a data breach – saving companies
nearly $400,000 on average (or $16 per record).  In fact, response
activities like incident forensics, communications, legal expenditures and
regulatory mandates account for 59 percent of the cost of a data breach.2 Part
of these high costs may be linked to the fact that 70 percent of U.S. security
executives report they don’t have incident response plans in place.3

The
process of responding to a breach is extremely complex and time consuming if
not properly planned for. Amongst the required activities, a company must:
·        Work
with IT or outside security experts to quickly identify the source of the
breach and stop any more data leakage
·        Disclose
the breach to the appropriate government/regulatory officials, meeting specific
deadlines to avoid potential fines
·        Communicate
the breach with customers, partners, and stakeholders 
·        Set
up any necessary hotline support and credit monitoring services for affected
customers

Each
one of these steps takes countless hours of commitment from staff members,
taking time away from their normal responsibilities and wasting valuable human
resources to the business.

Incident
response teams can expedite and streamline the process of responding to a
breach, as they’re experts on what companies need to do once they realize
they’ve been compromised. These teams address all aspects of the security
operations and response lifecycle, from helping resolve the incident, to
satisfying key industry concerns and regulatory mandates. Additionally,
incident response technologies can automate this process to further speed
efficiency and response time.

The
study also found the longer it takes to detect and contain a data breach, the
more costly it becomes to resolve. While breaches that were identified in less
than 100 days cost companies an average of $3.23 million, breaches that were
found after the 100 day mark cost over $1 million more on average ($4.38
million).
The
average time to identify a breach in the study was estimated at 201 days, and
the average time to contain a breach was estimated at 70 days.

The
study found that companies that had predefined Business Continuity Management
(BCM) processes in place found and contained breaches more quickly, discovering
breaches 52 days earlier and containing them 36 days faster than companies
without BCM.4

Analyzing
the Cost of a Data Breach

The
annual Cost of a Data Breach study examines
both direct and indirect costs to companies in dealing with a single data
breach incident. Through in depth interviews with nearly 400 companies across
the globe, the study factors in costs associated with breach response
activities, as well as reputational damage and the cost of lost business.

“Over
the many years studying the data breach experience of more than 2,000
organizations in every industry, we see that data breaches are now a consistent
‘cost of doing business’ in the cybercrime era,” said Dr. Larry Ponemon.
“The evidence shows that this is a permanent cost organizations need to be
prepared to deal with and incorporate in their data protection
strategies.” 

For
more details on the study, the full report is
available on the IBM X-Force Research Library. Country-specific reports are
also available for the United States, United Kingdom, Germany, Australia,
France, Brazil, Japan, Italy, India, the Arabian region (United Arab Emirates
and Saudi Arabia), Canada and South Africa.

This
year, IBM increased its investment in the Incident Response market with the acquisitionof
Resilient Systems. Resilient’s Incident Response Platform (IRP) empowers
security teams to analyze, respond, and mitigate incidents faster and more
efficiently. The newest version of the platform, announced today,
includes Resilient Incident Visualization, which graphically displays the
relationships between Indicators of Compromise (IOCs) and incidents in an
organization’s environment.

“The
amount of time, effort and costs that companies face in the wake of a data
breach can be devastating, and unfortunately most companies still don’t have a
plan in place to deal with this process efficiently,” said Ted Julian,
Vice President, Resilient an IBM Company. “While the risk is inevitable,
having a coordinated and automated incident response plan, as well as access to
the right resources and skills, can make or break how much a company is impacted
by a security event.”

IBM
also recently launched IBM X-Force Incident
Response Services, which include consulting and managed security
services to help clients manage all aspects of responding to a cyber breach.