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How to Reduce the Financial Impact of Security Incidents

Security incidents can vary widely in their scope and severity of damage. Regardless of how serious an incident may appear, it will always have financial implications.

Consider this: many of us are all too familiar with the massive data breaches and ransomware attacks that result in significant expenses and revenue losses. But even a seemingly minor security incident has a financial impact in the form of wasted time and interrupted operations. Once you add up the costs associated with lost productivity, along with the potentially devasting effects of a large-scale cyberattack, the importance of incident response planning becomes increasingly clear.

As is often the case with cybersecurity, effective planning is one of the best lines of defense.

How Much a Security Incident Can Cost Your Business

According to the 2021 Cost of a Data Breach Report from IBM and the Ponemon Institute, small businesses spend an average of nearly $3 million per data breach incident. For larger organizations, the total cost soars to over $5.3 million.

This staggering amount accounts for both the direct and indirect expenses an organization will incur after a data breach, including the cost of lost customers and business, credit monitoring services provided for customers, in-house communications, and investigations, etc. And of course, we have all seen the headline stories about high-profile corporations reporting losses that stretch into the tens of millions of dollars. What’s more, these expenses don’t simply dissipate once the incident is resolved. Though a significant portion of the impact will be felt within the first year or so, most businesses experience financial aftershocks for two or more years post-incident.

Businesses that are prepared, however, experience far less devastation. In a 2020 interview from cybersecurity publication CSO, a senior threat analyst from IBM noted that their data shows an increasingly widening gap between the financial implications for organizations with effective cybersecurity strategies and those without.

What does this mean for your business? Essentially, having a plan in place – including a good incident response process – is one of the smartest investments you could ever make.

Key Measures to Mitigate the Financial Ramifications of a Security Incident

Data breaches are just one of many forms of cyberattack, each one presenting its own risks and detrimental effects. Modern-day cybercriminals are not the amateur hackers of the past; now, they are highly-skilled, full-time professionals essentially operating cybercrime “businesses.” Therefore, your organization must mount an equally professional defense to keep pace with ever-evolving threats.

Here are a few essential steps to help your business be as prepared and protected as possible, in an effort to reduce the risk and costs of a possible attack.

1.      Partner with professionals to establish an incident response team.

When a security incident occurs, there is no time to waste determining who will be responsible for implementing the incident response plan. Instead, make sure you’re ready to take action at a moment’s notice with an experienced and dedicated incident response team that’s available 24/7 – because cybercriminals don’t limit their attacks to business hours.

2.      Be prepared to rapidly react to an incident by automating incident response procedures as much as possible.

Automation technologies are transforming cybersecurity across the board, but particularly when it comes to incident response. When you’re considering cybersecurity providers, look for one that offers incident response retainer options that include automation if/where possible.

Automating incident response protocol can both streamline and increase the efficiency of your security efforts. Elements such as machine learning and analytics empower your organization to take a more proactive approach to prevention while simultaneously strengthening the response if an incident does occur. Identification and containment of an issue can occur far more quickly, and your overall IT infrastructure can be appropriately simplified to better serve your needs.

3.      Consider investing in cybersecurity insurance.

Unfortunately, even the most effectively prepared businesses can still fall victim to cyberattack. Cybersecurity insurance, also referred to as cyber insurance, can be an excellent protective measure. Selecting the right coverage options can ensure that your organization is covered in the event of a security incident, substantially reducing the overall financial impact.

Keep in mind that there are various types of cybersecurity insurance, including policies that cover the loss of productivity and revenue, equipment loss, ransomware expenses, and more. It can be extremely helpful to consult a cybersecurity advisor to determine your options.

4.      Implement a robust strategy for security monitoring.

Most organizations have some level of security monitoring in place, but how do you know that your current approach is sufficient? Today’s technology has made it easier than ever to stay connected and maximize efficiency, no matter where you are or what device you’re working from. But unfortunately, that’s also left us far more vulnerable to cyberattacks.

Monitoring services are an essential component of your cybersecurity strategy. By choosing the right provider, you can be confident that you will see an excellent return on your investment. In addition to providing 24/7 protection, high-quality services will include measures that optimize your IT infrastructure’s productivity. And because you’ll have a professional team constantly keeping an eye on every possible access point, you’ll gain the peace of mind of to-the-minute alerts to allow for swift action.

Key monitoring service categories to consider include:

  • Dark Web monitoring
  • Security reputation rating and monitoring
  • Server/virtual service monitoring
  • Firewall/IPS monitoring and patching

5.      Make awareness a top priority.

Beyond developing an incident response team and deploying effective monitoring and protection, one of the best ways to protect your business from financially damaging security incidents is to educate and inform your team. Everyone from the CEO and the IT team to the administrative support staff and sales reps should be on the same page when it comes to cybersecurity.

Training sessions and Discovery sessions, as well as clear procedures and expectations, can have an incredibly positive impact on your incident prevention efforts.

I hope you found this information helpful. As always, contact us anytime about your technology needs.

Until next time,

Tim

Meet the Author
Tim Burke is the President and CEO of Quest. He has been at the helm for over 30 years.
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