Data breaches can have a devastating financial impact on businesses. According to IBM’s 2023 Cost of a Data Breach Report, the average cost of a data breach in 2024 was $4.88 million—a 10% increase over last year and the highest total ever.
Small businesses are particularly vulnerable; Verizon reports that around 60% of small businesses close within six months of experiencing a cyberattack.
Among all industries, healthcare organizations suffer the highest costs, with average breach expenses reaching $9.77 million per incident. While exact numbers vary, these trends emphasize the relentless nature of digital threats and the need for strong protection strategies.
That’s why investing in the right cyber insurance policy—and strengthening your defenses beforehand—can make all the difference when it matters most.
Our cybersecurity support team can help protect your business from costly data breaches and cyber threats.
What is the average cost of a data breach?
💡The financial toll of a data breach can be enough to end a business—between downtime, lost revenue, fines, and reputational fallout, the damage often exceeds what many companies can absorb. That’s why strong cybersecurity protections and the right insurance coverage are essential long before an attack happens.
Data Breach Cost by Industry:
| Industry | Average Cost Per Breach | Key Risk Factors |
|---|---|---|
| Healthcare | $9.77 million | Sensitive patient data, HIPAA regulations, high-value targets |
| Financial services | $5.97 million | Banking and transaction data, compliance burden, motivated threat actors |
| Pharmaceuticals | $5.01 million | Valuable research data, IP theft risk, global regulatory oversight |
| Technology | $4.97 million | Large volumes of user data, complex infrastructure, frequent targeting |
| Energy | $4.72 million | Critical infrastructure, OT/IT convergence, nation-state threats |
| Industrial (Manufacturing) | $5.56 million | Digital transformation, supply chain exposure, operational disruption risk |
| Professional services | $5.08 million | Client data access, inconsistent security practices, third-party risk |
Source: IBM Cost of a Data Breach Report 2024
The financial impact of a data breach can vary significantly depending on how the breach occurs. Some of the most damaging and costly incidents involve insider threats, shadow data, or phishing attacks.
- Malicious insider: Breaches caused by malicious insiders had an average global cost of $4.99 million. These incidents often involve employees or contractors abusing access for personal or financial gain.
- Shadow data-related: Incidents involving untracked or unmanaged data—known as shadow data—averaged $5.27 million per breach. These exposures are especially difficult to detect and secure.
- Phishing: Phishing attacks, one of the most common threat vectors, led to an average global cost of $4.88 million per incident. These breaches typically exploit human error through deceptive emails or messages.
👉 Contact us today to assess your business’s risk exposure and put the right protections in place before a breach happens.
Data breach costs beyond the dollar amount
When analyzing where the money goes during a breach, several critical cost categories emerge:
- Detection and escalation costs include forensic investigations, audit services, crisis management, and determining the breach’s scope and impact.
- Notification expenses cover informing affected individuals, regulatory bodies, and other required parties about the incident.
- Post-breach response encompasses credit monitoring for affected customers, identity theft protection, legal counsel, public relations management, and regulatory fines.
- Business disruption and lost revenue often represent the most significant financial damage, including system downtime, inability to conduct business, and lost customers.
⚠️ The long-tail costs of a data breach can persist for years. Studies show that 24% of breach costs occur more than a year after the initial incident, with ongoing customer churn and brand damage continuing to impact revenue.
Hypothetical Scenario: Imagine a small accounting firm that experiences a ransomware attack. Beyond the $50,000 ransom payment and $75,000 in immediate recovery costs, they face an exodus of clients concerned about their financial data security. Within six months, they’ve lost 35% of their client base and struggle to attract new business due to the reputational damage.
For a comprehensive insight into how a local IT team can reduce your exposure to a data breach, approach to protecting your business, download our local IT e-book
Average cost of a data breach for small businesses
For small businesses with fewer than 500 employees, the average cost of a data breach is approximately $3.3 million. However, this figure can represent a catastrophic percentage of annual revenue compared to larger organizations.
While smaller businesses might face lower total breach costs than enterprises, the proportional impact on their operations and survival is typically much more severe. Small businesses often lack the financial resources to weather the storm of a significant breach.
Several factors contribute to higher relative costs for small businesses:
- Limited security resources mean breaches often remain undetected longer, allowing attackers more time to extract data or cause damage.
- Lack of dedicated IT security staff results in slower response times and less effective containment strategies.
- Minimal preparedness for incident response typically leads to higher costs during recovery phases.
- Many of these risks are amplified by today’s distributed work models—understanding the challenges of remote work security is essential to closing hidden vulnerabilities.
According to Verizon, cyberattacks can be especially devastating for small businesses, many of which are unable to recover from the financial and operational impact of a breach.
Average cost of a cyber breach to a large business
Major breach examples showcase just how severe the financial impact can be. The 2019 Capital One breach affected over 100 million individuals and resulted in a $190 million settlement, along with regulatory fines and security overhauls. The 2017 Equifax breach impacted 147 million consumers and led to a landmark $700 million settlement—highlighting how a single event can spiral into long-term financial and reputational damage.
Large enterprises face some of the highest breach costs in the world, often exceeding $5 million per incident. Their vast data ecosystems, complex legal responsibilities, and brand visibility amplify both direct and indirect costs.
- Volume of data affected: Large businesses typically manage millions of records. When breached, the scale of forensic analysis, data recovery, and identity protection services drives costs up significantly.
- Legal obligations across jurisdictions: Enterprises operating in multiple states or countries must comply with overlapping regulations—such as CCPA, GDPR, and state-specific breach notification laws—creating legal and administrative burdens after an incident.
- Loss of public trust at scale: When well-known brands are compromised, the public response is swift and severe. Rebuilding customer trust and mitigating reputational fallout can take years and often leads to sustained revenue loss.
📌 This combination of technical, legal, and reputational fallout is why large businesses invest heavily in cyber insurance and proactive cybersecurity frameworks. It’s not just about recovery—it’s about survival in the spotlight.
Let our cybersecurity team implement protection tailored to your business and industry—contact us today to get started.
What drives the cost of data loss?
- Detection time (breach dwell time): The duration a breach remains undetected significantly impacts costs. IBM report 2023 found breaches identified and contained within 200 days averaged $3.93 million, whereas those extending beyond 200 days cost approximately $4.95 million—a 23% increase
- Type of data compromised: Loss of personally identifiable information (PII) costs substantially more than operational data due to regulatory requirements and customer impact. It’s important to understand the distinction between data privacy vs data security when analyzing breach impact—both play critical roles in determining how exposed your business really is.
- AI and automation in security: Organizations with fully deployed AI and security automation experienced breach costs $2.2 million lower than those without such systems.
- Incident response preparedness: Companies with tested incident response plans reduced breach costs by an average of $1.3 million compared to unprepared organizations.
- Threat actor type: External criminal attacks cost more than accidental breaches, with nation-state attacks being the most expensive to remediate.
- Shadow IT and cloud misconfigurations: The use of unauthorized applications and misconfigured cloud services can increase data breach costs. IBM report 2023 found breaches involving cloud misconfigurations had an average cost of $4.75 million
- Regulatory environment: Industries with strict compliance requirements (healthcare, financial services) face higher costs due to penalties and mandated notification procedures.
💡 According to the latest IBM report, involving law enforcement during a ransomware attack resulted in average savings of nearly $1 million in breach costs.
Ways to prevent data breaches
- Implement multi-factor authentication (MFA) across all business applications and accounts. Adding this additional security layer prevents 99.2% of automated attacks according to Microsoft.
- Conduct regular security awareness training for all employees, focusing on recognizing phishing attempts and practicing good security hygiene. Human error remains the entry point for 85% of breaches.
- Encrypt sensitive data both at rest and in transit to render stolen information unusable to attackers. This protection significantly reduces breach costs.
- Establish strong password policies and implement access controls based on the principle of least privilege. Limit employee access to only the data necessary for their specific roles.
- Monitor for shadow IT and unauthorized file-sharing to prevent unintentional data exposure. Regular security audits can identify these unsanctioned applications.
- Develop and regularly test an incident response plan to minimize breach impact. Organizations with practiced response teams reduce breach costs by up to 58%.
- Partner with a managed cybersecurity service provider to gain access to enterprise-level security expertise without the cost of an in-house team.
⚖️ Effective data breach prevention requires a balanced approach combining technology solutions, staff training, and well-defined security policies. No single measure can provide complete protection against today’s sophisticated threats.
Contact us to build a layered defense strategy that prevents breaches before they happen—our team can help you implement the right mix of tools, training, and policies
How our cybersecurity services reduce data breach risks
At CMIT Solutions, we’ve spent more than 25 years helping businesses safeguard their critical data and systems from evolving cyber threats. Our approach combines proven security methodologies with cutting-edge technology to deliver comprehensive protection.
We understand that each business faces unique security challenges based on their industry, size, and specific operational requirements. That’s why we begin with a thorough security assessment to identify vulnerabilities in your current infrastructure.
Our team of cybersecurity experts creates tailored security solutions that include:
- 24/7 monitoring and threat detection that identifies suspicious activities before they become full-blown breaches
- Regular vulnerability scanning and patching to eliminate security gaps
- Managed backup and recovery solutions that ensure business continuity even if an attack succeeds
- Security awareness training for your staff to address the human element of cybersecurity
✔️Our clients benefit from having an entire team of IT security specialists for a fraction of the cost of hiring in-house resources. Small businesses gain access to enterprise-level protection, while larger organizations extend their existing security capabilities.
Protect your business from costly data breaches with our expertise
The financial and operational impacts of a data breach can be devastating, especially for small and mid-sized businesses. With the average cost ranging from $3.3 million for small companies to over $9 million for U.S. businesses overall, cybersecurity is no longer optional—it’s essential for business survival.
Our team at CMIT Solutions can help protect your business with customized cybersecurity solutions designed for your specific needs. Contact us today at (800) 399-2648 or schedule a consultation online.
FAQs
What would amount to a data breach?
A data breach occurs when unauthorized individuals gain access to protected information. This includes theft or exposure of personal data (names, addresses, SSNs), financial information (credit card details, bank accounts), or protected business data (intellectual property, confidential documents).
Breaches can result from various incidents, including hacking, malware infections, phishing attacks, insider threats, or even accidental exposure through misconfigured systems. Any unauthorized access to protected data, regardless of whether it was malicious or accidental, constitutes a data breach under most regulatory frameworks.
What should I do immediately after a suspected data breach?
Activate your incident response plan immediately after discovering a potential breach. First, contain the incident by isolating affected systems to prevent further data loss. Engage IT security professionals or your managed service provider to investigate the breach’s scope and impact.
Document everything throughout the process, including when the breach was discovered, what actions were taken, and what data may have been compromised. Consult with legal counsel to understand your notification obligations, as most states require businesses to inform affected individuals and regulatory authorities.
Timely response is critical—studies show that organizations that contain breaches within 30 days save an average of $1.12 million compared to those with longer containment periods.
How can I calculate the true cost of a cyberattack for my business?
To calculate the true cost of a cyberattack, examine both direct and indirect expenses. Direct costs include immediate technical response, forensic investigation, legal fees, notification expenses, and potential regulatory fines. Indirect costs encompass business downtime, lost productivity, customer churn, and reputational damage.
The NIST Cybersecurity Framework provides resources to help businesses evaluate potential financial impacts from various cyber threats.
Do all data breaches need to be reported to authorities or clients?
Reporting requirements for data breaches vary based on location, industry, and the type of data compromised. In the United States, all 50 states have breach notification laws that typically require businesses to inform affected individuals when their personal information is compromised.
E.g. Federal regulations like HIPAA require healthcare organizations to report breaches affecting 500 or more individuals to the Department of Health and Human Services. Consult with legal counsel familiar with your industry and location to understand specific reporting obligations, as failure to properly notify can result in substantial additional penalties.
What are the legal consequences of a data breach in the U.S.?
The legal consequences of a data breach in the U.S. can be severe and multi-faceted. Businesses may face regulatory fines from state attorneys general or federal agencies like the FTC, with penalties ranging from thousands to millions depending on the breach’s severity and the company’s security practices.
Class-action lawsuits from affected individuals are common following significant breaches, often resulting in substantial settlements. For example, Equifax agreed to pay up to $700 million to settle federal and state investigations following its 2017 breach.
Beyond financial penalties, businesses may be required to implement costly security improvements and submit to years of regulatory oversight.
How can CMIT Solutions help protect my business from costly breaches?
CMIT Solutions provides comprehensive cybersecurity services designed to prevent data breaches and minimize impact if they occur. We implement multi-layered security solutions, including advanced endpoint protection, network security monitoring, secure backup systems, and vulnerability management to identify and address weaknesses before attackers can exploit them.
Our team delivers regular security awareness training to educate your staff about emerging threats and prevention techniques. We also create and test incident response plans to ensure rapid, effective action during security events.
With 24/7 monitoring and management of your IT systems, we detect suspicious activities early and respond quickly to potential threats. Our proactive approach has helped thousands of businesses significantly reduce their cybersecurity risk profile while meeting compliance requirements for their industries.
