IBM Cost of a Data Breach Report 2022: Global average cost hits record high of US$4.35 million!

IBM Security has released the 2022 Cost of a Data Breach Report, revealing that data breaches are more costly and impactful than ever before, with the global average cost of a data breach for studied organisations reaching an all-time high of US$4.35 million.

The report states that breach costs have increased by nearly 13% over the past two years, and the findings suggest these incidents may also contribute to the rising costs of goods and services. Indeed, with global goods costs already soaring due to inflation and supply chain issues, 60% of studied organisations raised their product or service prices as a result of the breach. The persistence of cyberattacks also reveals the "haunting effect" of data breaches on enterprises, with the IBM report finding that 83% of organisations have experienced more than one data breach in their lifetime. Another factor rising over time is the "after-effect" of breaches on these organisations, an impact that lingers long after the incident, as nearly 50% of data breach costs are incurred more than a year after the breach occurs. The 2022 Cost of a Data Breach Report is based on an in-depth analysis of real-world data breaches experienced by 550 organisations globally between March 2021 and March 2022. The study was sponsored and analysed by IBM Security and conducted by the Ponemon Institute.

▌ Key Findings

▶ Critical Infrastructure Lags Behind Zero Trust

Almost 80% of critical infrastructure organisations studied do not adopt zero trust strategies, and their average breach cost rose to US$5.4 million, an increase of US$1.17 million compared to those that do. Moreover, 28% of breaches among these organisations were ransomware or destructive attacks, as attackers seek to disrupt global supply chains that rely on these organisations, including financial services, industrials, transportation, and healthcare.

▶ Ransom is Not Worth It

Ransomware victims in the study who chose to pay the ransom demands saw only a US$610,000 reduction in average breach costs compared to those who chose not to pay — and this does not include the cost of the ransom itself. Given the high cost of ransom payments, the financial loss could be even higher, suggesting that simply paying the ransom may not be an effective strategy.

▶ Cloud Security Immaturity

43% of studied organisations are in the early stages of or have not yet started applying security practices in their cloud environments, resulting in average breach costs over US$660,000 higher than organisations with mature security in their cloud environments.

▶ Security AI and Automation Save Millions of Dollars

Organisations with fully deployed security AI and automation experienced US$3.05 million less in average breach costs compared to those without the technology — the largest cost savings observed in the study.

▶ Phishing Becomes the Costliest Breach Cause

While stolen credentials remain the most common cause of breaches (19%), phishing was the second most common (16%) and the costliest cause, leading to an average breach cost of US$4.91 million for responding organisations.

▶ Understaffed Security Teams

62% of studied organisations stated they do not have sufficient staffing to meet their security needs, incurring an average of US$550,000 more in breach costs than organisations that claim to be sufficiently staffed.

▶ Healthcare Breach Costs Top 10 Million for the First Time

Breaking the industry breach cost record for the 12th consecutive year, the average cost of a healthcare data breach increased by nearly US$1 million to a record-high US$10.1 million.

"Businesses need to put their security defences on the offensive and beat attackers to the punch. It’s time to stop adversaries from achieving their goals and start minimizing the impact of attacks. The more businesses try to perfect their perimeter instead of investing in detection and response, the more breaches will fuel cost increases," said Charles Henderson, Global Head of IBM Security X-Force. The industrialisation of cybercrime has driven the evolution of ransomware. IBM Security X-Force found that the duration of ransomware attacks has fallen by 94% over the past three years — from over two months to under four days. These exponentially shorter attack lifecycles can trigger higher-impact attacks, as cybersecurity incident responders have only a very brief window of opportunity to detect and contain the attack. With "ransom time" shrinking to a matter of hours, it is crucial that businesses rigorously test their incident response playbooks in advance. However, the report points out that up to 37% of organisations with incident response plans do not test them regularly. To address issues highlighted in the report, such as the lack of regular response capability testing and understaffed security teams, Pygmalion Verification can help businesses resolve and optimise targetedly. The Pygmalion Security Metric Verification Platform provides enterprises with continuous, automated verification of security defensive capabilities, empowering staff at all levels and roles through visualised and quantified data. For high-cost breach causes such as credential theft, phishing, covert tunnels, and data uploads, Pygmalion Security Lab can realistically simulate and replicate these scenarios to help businesses verify if they can effectively defend against them. The conclusions presented in the report reveal significant trends in corporate data and network security in recent years. Enterprises must pay close attention to the rising costs of data breaches and the shrinking attack lifecycles, recognising the issues in their own network security construction and confirming whether their security defensive capabilities are in place. As Charles Henderson noted, the right strategy combined with the right technology can make a significant difference when a business is attacked.