Customer Data Cybersecurity Image Source: Bain & Company
AI Cybersecurity Europe Fintech Reports

The Financial Cost of Data Breaches Soars to 6 Year High With $4.24 Million Recorded Losses in 2021

The average amount of financial damages caused by a breach of data grew around 10% year on year to a recorded $4.24 million in 2021; the highest increase in a single year since the start of the reporting period in 2015. This is according to data presented by Atlas VPN.

The influence of a data breach poses a series of negative consequences for the unfortunate company involved, including loss of sales, loss of reputation, excess costs associated with data recovery, and even potential staff redundancies. The record-high average losses can be directly linked to the rapid onset of remote work, as it created many new loopholes for cybercriminals to exploit.

Between May 2020 and March 2021, researchers from IBM conducted around 3,500 separate interviews with individuals from 17 countries and 537 firms that had fallen victim to data-related cybercrime.

In 2020, a data breach caused an average of $3.86 million in monetary damages, while in 2021, the number spiked to $4.24 million, representing a 9.84% increase. Meaning, these losses are at record heights since 2015.

The infographics included below are derived from the original report by Atlas VPN.

Seven years ago, the average total cost of a data breach stood at $3.79 million. The lowest losses were seen in 2017, where companies suffered about $3.62 million in damages per incident.

Moreover, the average data leak cost in the US stands at $9.03 million, which is the highest number globally. The Middle East is in second place, with average losses reaching $6.93 million per incident.

Looking at data breaches from the perspective of the customers whose data was stolen, what dangers are they exposed to?

The study reveals that as many as 44% of records stolen included some kind of personally identifiable information (PII). Examples of this information include email address, Social Security number, full name, driver’s license number, bank account number, and passport number.

Fraudsters that obtain this information can carry out various kinds of fraud, ranging from locking you out of your online accounts to full-blown identity theft.

Data Breach Costs by Industry

As expected, financial damages vary in range depending on the industry of the enterprise that fell victim to the data leak.

Incidents in the healthcare industry are the costliest, as losses averaged around $9.23 million this year. In this instance, the high cost per breach can be accredited to the large amounts of sensitive data that healthcare companies store about their patients.

The healthcare sector also experienced one of the highest year-over-year monetary loss increases. The damages jumped from $7.13 million in 2020 to $9.23 million in 2021, a 29.5% growth.

Among the top five worst affected industries are the financial ($5.72 million), pharmaceuticals ($5.04 million), technology ($4.88 million), and energy ($4.65 million) sectors. The energy sector dropped from the second most costly in 2020 at $6.39 million to fifth place in 2021.

At the other side of the spectrum stands the public sector, where damages hover around $1.93 million, but the increase from 2020 is substantial at 78.7%.

Many other industries faced large YoY increases as well, such as media (92.1% growth), hospitality (76.2% growth), retail (62.7% growth), and consumer (42.9% growth).

The overall findings only confirm the trend that we have seen in the past year – cybercrime damages are ramping up faster than ever before.

Author

  • Tyler is a Fintech Junior Journalist with specific interests in Online Banking and emerging AI technologies. He began his career writing with a plethora of national and international publications.

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