The Cost Of Cyber Security Breaches: Are You Prepared?

Updated 27/09/2024

With the number of internet users in the UK growing every year, businesses are having to make a continual transition into the cyber age to meet the demands of a digitally dependent society. However, as businesses embrace this evolution, so does crime.

There are around 65,000 attempts to hack small-to-medium businesses in the UK daily. If successful, the cost of cyber security breaches can have a detrimental effect on business operations.

The Average Cost Of Cyber Security Breaches In The UK

The easiest way to grasp the concept of the cost of cyber security breaches in the UK is to lay out the statistics.

According to a report carried out by DETICA, the cost of cyber-crime to the UK is £27bn per year, with £9.2bn of this coming from the theft of IP from UK businesses. These estimates are also thought to be somewhat of a best-case-scenario, so the actual financial damage could be much higher.

A separate study by Beaming revealed that over 27% of UK businesses fell victim to a form of cyber attack in 2023. The same study found that over 85% of companies in the finance and manufacturing sectors, both of which heavily utilise AI, data analytics, and automation technologies, experienced breaches that same year. These figures suggest that even businesses with advanced technology are not immune to cyber threats.

How Much Could A Cyber Breach Cost You?

The cost of cyber security breaches grows exponentially with the size of the business. On average, the cost of a cyber breach can be £3.9m for a small company, £12m for a medium-sized company, and £940m for a large company – again, these averages are best-case scenarios. In a worst-case scenario, the average cost of a cyber breach for a medium to large-sized business can be upwards of £1420m.

The cost of a cyber breach also varies between the different business sectors – with healthcare, pharmaceutical, and biotechnology being the hardest hit financially by IP theft. These statistics highlight the financial burden cyber breaches place on businesses, particularly those handling sensitive or valuable data.

The Factors Behind The Cost Of Cyber Security Breaches

Several key factors contribute to the overall cost of a cyber security breach, each affecting the financial, operational, and reputational stability of a business. Understanding these factors can help organisations manage and mitigate the consequences of a data breach.

The factors behind the cost of a cyber breach include the following:

1. Detection costs
2. Remediation costs
3. Operational costs
4. Reputational costs
5. Legal issues

1. Detection Costs

It’s estimated that most companies are unaware that they are victims of a cyber-breach; and the longer it takes to detect a cyber-breach, the higher the repair cost. It can take some business up to 200 days to detect a breach, but if a company can respond to the incident in under this time, they can save up to £750,000 on costs.

Advanced Detection and Response solutions constantly gather forensic-level data from the endpoints, networks, and cloud services. By leveraging Machine Learning, these systems can analyse the information, looking for malicious behaviour or abnormalities and flag them for experienced cybersecurity professionals to investigate further.

Top-end solutions will go as far as sandboxing processes, isolating endpoints from the network, and rolling back malicious activity. All of this helps to drastically reduce the time it takes to detect malicious activity on the network.

2. Remediation Costs

Once the breach is detected, remediation efforts and their associated costs are factored in, such as: securing the network, crisis management, audits, and investigations. The costs associated are not just in-house man-hours, but also the expense of third party specialists, and if required, any technology investments that need to be made.

To begin the remediation process, you need to understand the extent of what has happened and how it took place before you can put a solution in place to ensure it doesn’t happen again.

Reviewing logs on devices through the network will give you an idea of what has occurred, if you have a SIEM (Security Information and Event Management) solution in place, this will allow you to correlate log events across multiple devices and build a picture of the event and how it occurred. A correctly set up SIEM tool will also detect and alert on these types of behaviours as they unfold, reducing detection time.

3. Operational Costs

During a cyber-breach, some companies may have to completely halt their operations, causing a direct impact on output and loss of revenue. For many organisations, it will be the interruption to normal business operations that causes the biggest impact.

When you have to dedicate internal resources to remediation actions, they can’t carry on their normal job role. When daily business operations are impacted, a drop in overall business efficiency and productivity is to be expected, and this could continue throughout the remediation process, possibly even longer.

Interested in bolstering your cyber security? Look no further than Net Consulting. We provide tailored IT security consulting services built around the five stages of NIST’s ‘Cyber Security Framework’.

Get in touch with a member of our team to learn more.

4. Reputational Costs

44% of consumers in the UK say that they won’t spend money on a company while it’s the victim of a cyber breach. Coupled with this is the risk that stock prices may drop rapidly if a company is undergoing a halt in business, which highlights the reputational damage cyber breaches can cause.

This impact is difficult to measure, but again, a cost for the man-hours invested in managing the reputational impact needs to be accounted for. Alongside this, a company will have to take into account any costs associated with the communications and marketing effort that will be required to support the business and its message during and post breach will need to be considered.

5. Legal Issues

In an extreme example, British Airways experienced a huge cyber-breach in 2018 that affected over 400,000 customers. Names, addresses, and payment details were obtained due to the rather poor security measures put in place by the large company.

For their failure in protecting the personal and financial details of their customers, the airline was fined £20m by the Information Commissioner’s Office (ICO). 

On the matter, Information Commissioner Elizabeth Denham had this to say:

“People entrusted their personal details to BA and BA failed to take adequate measures to keep those details secure. Their failure to act was unacceptable and affected hundreds of thousands of people, which may have caused some anxiety and distress as a result. That’s why we have issued BA with a £20m fine – our biggest to date.”

How To Protect Against A Data Breach

Data breaches can lead to serious financial consequences for businesses, but there are practical steps you can take to reduce the cost of a cyber security breach, or ideally, avoid one altogether.

These include:

Raising Company Wide Awareness

Educating employees about cybersecurity risks can prevent accidental breaches within the business. Regular training helps everyone recognise potential threats and follow best practices, like good password hygiene.

Minimise Threat Surface

Identify and reduce vulnerabilities in your company’s software, hardware, and cloud services. Check that employees only have access to systems they need, remove old accounts, and regularly patch software to fix security flaws.

Maintain Data Backups

Backing up your data regularly won’t help prevent a breach, but they’ll speed up recovery if one occurs. Use methods like cloud storage or external drives so you can restore critical files quickly in the event of data loss.

Use Automation Tools

Consider investing in automated security tools to detect and contain breaches faster. AI and automation reduce breach lifecycles, cutting costs and improving response times compared to manual processes.

Prepare for Incidents

Create and test an incident response plan to minimise the impact of a cyber breach. A well-prepared team can respond promptly and effectively, limiting damage and improving customer and stakeholder trust.

The Bottom Line

From viewing these statistics, and discussing the factors behind the cost of a cyber breach, we can see that the cost of cyber security breaches in your business depends on the extent your business is affected by each of the aforementioned individual factors, such as:

• The size of your business
• The sector you operate in
• The time to detection.
• The extent of the breach.
• Remediation costs (Including man-hours, hardware, and 3rd party).
• Reputational loss (Immediately & time spent recovering)
• Operational loss.
• Legal fines.

The most effective way to mitigate the costs of cyber security breaches is to prevent the length of the cyber breach, by having measures in place that detect the breach as earlier as possible – or, by preventing an attack altogether.

Overall, set against a backdrop of ever-growing uncertainty and digital complexity, now more than ever, business owners should be asking themselves how much a cyber-breach could cost them.

At Net Consulting, we offer several services that can help defend your business against potential cyber threats. To find out more about our services, give us a call on 02920972020, or send us an email at info@netconsulting.co.uk. 

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