Inflation is already impacting organizations worldwide, and its impact on the cost of cybersecurity incidents must be considered. The Consumer Price Index, an essential KPI used when evaluating inflation in the United States, rose by 8.3% in the past 12 months – its highest increase since the early 1980s. A balanced economy will increase the CPI by roughly 2% annually.
Additionally, breaches are becoming more expensive. One of the most alarming cyber breach statistics is that the average data breach cost reached an all-time high of USD$4.35 million in 2022, up by 12.7% from 2020.
Data loss in cyber security is a significant potential expense for any organization, and it’s important to consider how inflation can make data loss incidents even more expensive in the short and long term.
Organizations across all industries need to consider how inflation will continue to impact the cost of data loss and other cybersecurity incidents when assessing and managing risks. Read on to learn more about the impact of inflation and what you need to know about it.
Cyber Security Data Loss Incidents Will Become More Costly
The data breach cost is already rising, and inflation will likely make it even more expensive. For example, one analysis demonstrates how an incident’s secondary response costs (SRC) can rise by up to 19.4% when considering inflation.
An example of SRC is how Target spent $162 million due to its 2013 data breach, which consisted of reissuing cards, shipping them, and a sustained increase in call volume. Since these costs are spread out over time rather than upfront, inflation can impact the total sum more substantially than first response costs.
This significant increase in SRC can catch companies by surprise if they are basing risk assessments on current economic conditions rather than how they may change.
Adjusting for Inflation in Data Loss Prevention in Cyber Security
You don’t need a degree in data science to start adjusting for inflation throughout your cyber loss data prevention planning. Let’s explore some actionable ways to adjust your risk management with inflation in mind.
Risk Assessments Must Include Inflation
A critical component of risk assessment is evaluating the potential financial impact of a given threat. Yet, it’s common for risk management teams to consider its costs based on current economic conditions. This may have been acceptable in the past, but the financial impact estimates now need to adjust for inflation.
Will the incident occur immediately after your risk modeling or three years later? Nobody knows how the inflation rate might change, but using projections from financial analysts can help. Leverage these projections and current data to modify your financial assessments of the given risks.
Compare Mitigation Costs to Impact Costs
Including inflation during your risk assessments will improve the accuracy of another vital component of risk management – comparing mitigation costs to impact costs.
Implementing risk mitigation strategies that are less expensive than the cost risk occurring is essential for maximizing your risk management budget. For example, you don’t want to spend $1 million to mitigate a risk that will only cost $200,000.
However, If you’re basing the impact costs on current conditions, you may decide to implement less-costly mitigating strategies or even accept the impact altogether. But when the risk occurs, you may discover its actual cost is significantly higher due to future economic conditions.
You also need to consider inflation regarding your mitigation strategies. Will inflation make those strategies more expensive? It will most likely, and considering inflation creates more accurate decisions that will significantly benefit the business.
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Consider The Cost of Cybersecurity Insurance
Cybersecurity insurance helps mitigate the cost of an incident based on your level of coverage, just like auto or home insurance. Risk assessments that do not account for inflation will give an organization a false understanding of what level of coverage they need.
For example, your risk assessments may reveal that a mid-tier insurance plan will be sufficient. But by not accounting for inflation over the coming years, you may end up with lacking coverage when a costly data loss breach occurs.
Considering inflation, you can ensure that your cyber insurance plan will meet your current and future protection needs.
Evaluate the Cost-Saving Potential of Zero-Trust Architecture
Data loss breaches often occur due to phishing attacks or otherwise compromised credentials. Zero-trust architecture can help reduce the damage of these attacks by restricting the mobility of an unauthorized user within your system.
Zero-trust architecture requires constant authentication as a user moves through the network and applications. Additionally, authentication isn’t solely based on credentials but on geographic data, the device used, and the user’s past behavior. The attacker will be cut off if any of those elements are suspicious.
Upgrading to zero-trust can produce significant long-term savings. An IBM report found that companies without zero-trust architecture have a higher average cost per data breach — approximately USD$1 million higher per breach. How will that cost savings increase when you consider inflation?
Partner with Centraleyes for Data Loss Protection in Cyber Security
Inflation can profoundly affect most aspects of your data loss protection and overall risk management. From risk assessments to cyber insurance, businesses across all industries must start considering inflation to improve the accuracy of their decision-making.
Using the right risk management platform will streamline the entire process by granting real-time insights into your risk ecosystem and providing on-demand reporting. Centraleyes is an industry-respected risk management platform that can make accounting for inflation straightforward and seamless.
Are you ready to improve the accuracy and effectiveness of your risk management? Contact us today to talk to a risk management expert to learn how Centraleyes can improve your risk posture.
Start Getting Value With
Centraleyes for Free
See for yourself how the Centraleyes platform exceeds anything an old GRC
system does and eliminates the need for manual processes and spreadsheets
to give you immediate value and run a full risk assessment in less than 30 days
