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July 25, 2023

Businesses Must Counter Soaring Data Breach Costs to Stay Afloat

Small businesses are the backbone of the American economy, constituting 99% of all businesses across the nation. These enterprises are the lifeblood of communities, generating a substantial portion of the country's economic activity.

The average small business makes a modest $53,000 in revenue, and self-employed ventures with no employees generate around $44,000 annually, according to Zippia. And the average small business profit margin is anywhere from 7%-10%.

However, all that hard-earned success can be for naught with severe financial damages if a data breach were to happen. According to a recent IBM report, the average cost of a data breach reached $4.45 million in 2023 – an all-time high for the report and a 15% increase over the last three years.

And businesses are divided in how to handle incident costs.

The study found that while 95% of studied organizations have experienced more than one breach, breached organizations were more likely to pass incident costs onto consumers than to increase security investments.

To avoid taking a massive financial hit and passing those costs onto consumers, as some businesses have suggested, businesses and individuals must understand that cyber threats are a dynamic and persistent challenge. Leveraging advanced security solutions, staying informed about the latest threats and maintaining a proactive stance toward cybersecurity are critical to staying one step ahead in the ongoing cybersecurity battle.

The IBM report digs deeper into advanced security solutions that businesses can leverage, and they need to act fast as the cyberthreat landscape always evolves.

Utilize AI and automation. AI and automation have a big impact on speed of breach identification and containment for studied organizations. Organizations with extensive use of AI and automation experienced a data breach lifecycle that was 108 days shorter compared to studied organizations that have not deployed these technologies (214 days versus 322 days), according to the report. Organizations that deployed security AI and automation extensively saw, on average, nearly $1.8 million lower data breach costs than organizations that didn't deploy these technologies.

Involve law enforcement. Ransomware victims in the study that involved law enforcement saved $470,000 in average costs of a breach compared to those that chose not to involve law enforcement, according to the report. Despite these potential savings, 37% of ransomware victims studied did not involve law enforcement in a ransomware attack.

"Time is the new currency in cybersecurity both for the defenders and the attackers,” said Chris McCurdy, General Manager, Worldwide IBM Security Services. “As the report shows, early detection and fast response can significantly reduce the impact of a breach."

There is another thing businesses can do to mitigate security costs. That is to become allies with MSPs. MSPs bring a wealth of expertise to the table, with dedicated teams of professionals well-versed in the latest security threats and best practices to combat them. With MSPs, businesses, especially SMBs, gain access to cutting-edge security measures and technologies that are often beyond their individual budget and capabilities.

MSPs, with flexible payment models, employ advanced monitoring tools to detect potential threats in real-time, enabling them to identify and address security vulnerabilities before they escalate into costly data breaches. This early detection and response reduce the impact of potential attacks, potentially saving businesses from substantial financial losses and reputational damage.

MSPs also play a vital role in guiding small businesses through the complex landscape of data protection regulations. Staying compliant with these regulations is essential for any business, but it can be especially challenging for smaller enterprises with limited resources. MSPs understand these regulations and can help businesses adhere to them, reducing the risk of legal penalties and fines in the event of a breach.

In addition to their preventive efforts, MSPs are equipped to respond rapidly and effectively in the unfortunate event of a data breach. Their experienced teams can contain the breach, mitigate the damage and restore systems and data more efficiently, minimizing downtime and its associated costs. A comprehensive disaster recovery plan, often facilitated by MSPs, ensures that businesses can quickly recover operations even after a breach, reducing the overall impact on revenue and reputation.

This collaborative approach empowers these enterprising ventures to focus on their core operations with confidence, knowing that their sensitive data is in capable hands and protected from cyber risks.

Edited by Alex Passett

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