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- High cost of data breaches
- A Global Perspective on Data Breach Costs
- The Role of AI and Automation in Mitigating Data Breach Costs
- The Investment Paradigm in Security AI and Automation
5 min to read
In 2023, the average cost of a data breach reached an all-time high of $4.45 million, according to IBM and the Ponemon Institute[1], an increase of 2.3% compared to the previous year ($4.35 million).
The study, in its 18th consecutive edition, exposes the underlying causes of data breaches, offering insightful recommendations for companies to mitigate and contain these incidents, thereby reducing their financial impact. Its findings are based on data collected from 553 organizations across 16 countries and 17 industries impacted by data breaches between March 2022 and March 2023.
A Global Perspective on Data Breach Costs
The United States led the list of countries for the 13th consecutive year, reporting the highest average data breach costs at $9.48 million.
The US was followed by the Middle East region, where data breaches cost an average of $8.07 million. The numbers then drop somewhat precipitately, with Canada at $5.13 million, Germany at $4.67 million and Japan at $4.52 million.
The figure below shows the figures for the top 10 countries or regions.
Source: Cost of a Data Breach Report 2023, IBM Security.
As for industry figures, healthcare continues to lead in data breach costs for the 13th consecutive year, with an average cost of $10.93 million per breach. Over the past three years, the average cost of a data breach in this sector went up by 53.3%, an increase of more than $3 million since 2020.
Healthcare is followed by the financial, pharmaceutical, technology and energy sectors. The graph below shows the cost of a breach across most major economic sectors in 2022 and 2023.
Source: Cost of a Data Breach Report 2023, IBM Security.
It is important to note that just because an industry has a high average cost per breach, it doesn’t necessarily mean it is the most targeted. In fact, IBM reported that manufacturing was the most commonly targeted industry in 2023.
The Role of AI and Automation in Mitigating Data Breach Costs
One important finding in the report is that organizations that adopt extensive security AI and automation technologies report significantly lower data breach expenditures —$1.76 million less than the average – as compared to companies who have not adopted these technologies at all.
They are also quicker to react— companies with security AI and automation technologies reported a 108-day shorter time to identify and contain breaches as compared to companies that do not (214 days vs 322 days).
It seems logical to assume that these findings provide strong enough reasons for why companies should invest in security AI and automation technologies to quickly and effectively mitigate the impact of a data breach and reduce the financial burden of addressing them.
But the reality is that the research participants reported divided perspectives on increasing security investments: only 51% of respondents indicated they planned for additional security spending after suffering a breach.
The Investment Paradigm in Security AI and Automation
As breaches become increasingly more common and more expensive to address, regulations regarding data are expected to tighten. Consider the healthcare sector, a highly regulated industry, which has faced the highest average data breach cost for 13 years in a row and is recognized as critical infrastructure by the US government. To adhere to strict government guidelines and maintain an advantage among competitors, entities within this space will likely need to invest more in preventive security AI and automation measures, regardless of their willingness.
For investors, this trend could signal robust growth opportunities in companies that provide both security and data privacy solutions, positioning this budding sector as a compelling opportunity for strategic investment exposure.
