Most business decision-makers in the UK admit that their organisation will suffer from a cyber security breach at some point. They also anticipate that recovering from a data breach would cost upwards of £1.2 million on average for their organisation. That’s according to the Risk:Value report issued by information security and risk management company NTT Com Security, which surveyed business decision-makers in the UK as well as the US, Germany, France, Sweden, Norway and Switzerland.
While nearly half (48%) of UK business decision-makers say that information security is ‘vital’ to their organisation, and just half agree it’s ‘good practice’, a fifth admit that poor information security is the ‘single greatest risk’ to the business ahead of ‘decreasing profits’ (12%) and ‘competitors taking market share’ (11%) and on a par with ‘lack of employee skills’ (21%).
Well over half (57%) agree that their organisation will suffer a data breach at some point, while a third disagree. One-in-ten state that they simply don’t know if this will be the case.
Respondents estimate that a breach would cost them an average of £1.2 million, even before ‘hidden costs’ like reputational damage and brand erosion are taken into consideration. Again, on average it would take around two months to recover from a breach. Respondents to the comprehensive survey also anticipate a 13% drop in revenue, on average, following a breach episode.
Starting to hit home
The survey shows that recent high-profile data breaches are starting to hit home. A similar report published by NTT Com Security in 2014 revealed that 10% of an organisation’s IT budget was spent on information security compared to 11% this year. However, in the latest report, around a quarter (23%) of UK businesses reveal that more is spent on Human Resources than information security.
In terms of remediation costs following a security breach, nearly a fifth (18%) of a company’s costs would be spent on legal fees, 18% on fines or compliance costs, 17% on compensation to customers and 11% set aside for third party remediation resources. Other anticipated costs include PR and communications (14%) and compensation paid to both suppliers (12%) and employees (11%).
According to the report, the majority of respondents in the UK admit they would suffer both externally and internally if data was stolen, including loss of customer confidence (66%) and damage to reputation (57%) as well as suffering direct financial loss (41%). Over a third of decision-makers (34%) expect to resign (or expect another senior colleague to do so) as a result of a breach.
Stuart Reed, senior director for global product marketing at NTT Com Security, commented: “Attitudes towards the real impact of security breaches have really started to shift. That’s no surprise given the year we have just had. We’ve seen several major brands reeling from the effects of serious data breaches, and struggling to manage the potential damage, not only to their customers’ data, but also to their own reputation. While the majority of people we spoke to expect to suffer a cyber security breach at some point, most fully expect to pay for it as well, whether that’s in terms of third party and other remediation costs, customer confidence, lost business or even, possibly, their jobs.”
Who’s responsibility is it anyway?
*41% of UK organisations have a disaster recovery plan in place, with 40% having a formal security policy in place. In both cases, almost half are in the process of implementing or designing one
*When it comes to responsibility for managing the company’s recovery plan, 15% say the CEO now has responsibility, although this still largely falls to the Chief Risk Officer (CRO), the Chief Information Officer (CIO) or the Chief Security Officer (CSO)
*While 77% agree it’s ‘vital’ their business is insured for security breaches, only 26% have dedicated cyber security insurance. However, 38% of those questioned are in the process of obtaining a policy
*One-in-five respondents in the UK say they don’t know if their organisation has any type of insurance in place to cover for the financial impact of data loss or an information security breach
“It’s encouraging to see that almost all UK businesses now have a disaster recovery and formal information security policy in place, or are at least planning to implement one soon,” added Reed.
“Clear, concise internal processes and policies for employees and contractors have so often been overlooked, and this is what can lead to complacency and poor security hygiene. When we talk to clients, we make it absolutely clear that educating staff about security should be a top priority, supported all the while by clear and simple procedures and backed up by a solid incident response plan.”
*The Risk:Value Executive Summary report can be downloaded here