What Is the Actual Cost of Cybercrime?
As most companies have embraced digital transformation in recent years, nearly all business-critical activities are at risk of cybercrime. Organizations are not only worried about the alarming rise of cyber attacks, but the perpetrators have also become more intelligent, adapting swiftly and targeting small businesses more effectively.
From reputational and financial damages to downtime and broken trust with customers, a breach can devastate any business. But what is the actual cost of cybercrime? And, more importantly, how can you boost cybersecurity and defend your business from them?
This article reveals:
- The major impacts of cybercrime on organizations and dirty tactics commonly used by attackers to devastate businesses of all sizes
- Statistics and data showing how much cybercrime costs the global economy and American businesses each year
- The best way to bolster cybersecurity in your business to avoid becoming a victim
What Is the Impact of Cybercrime on Organizations?
Cyber attacks in recent years have dominated the headlines. From the huge supply chain breach against Kaseya and SolarWinds to the shocking increase in identity theft and malware attacks, cybercriminals are unrelenting in their quest for business disruption and profit.
Even more, the coronavirus pandemic has given attackers a golden chance to test both human and cyber defenses in small businesses. With employees working from home being less vigilant and as a result, more vulnerable because of working outside their company's protected IT infrastructure, cybercrimes have become ordinary and even more devastating.
And when attackers break through your defenses, damages can add up significantly and take a major toll on your small business. Businesses with weak cybersecurity are easy targets and risk the following things:
1. Huge Financial Loss
The costs of cybercrime are many, but financial loss among the biggest. Cybercriminals know that you want to protect critical and sensitive data. So they can hack into your systems and encrypt all business information then demand for a ransom to unlock it.
Cisco's statistics say that the average amount paid for ransom by attack victims was over $300,000 in 2020. That means attackers won't spare you when it comes to swindling money off your business.
Beyond the ransom itself, there are recovery costs, such as investing in additional IT resources to rebuild more secure servers and recover data. You also lose money from the downtime caused by the breach.
The loss of sensitive data racks up even larger bills. A breach can lead to potential fines, penalties, and expensive lawsuits. Target, a general merchandise retailer in the U.S., paid out $18.5 million in 2017 to settle a large-scale data breach that happened in 2013.
2. Damaged Reputation and Brand Identity
Small businesses don't just lose money and data following a cyber attack, they also risk ruining their brand name and losing current customers due to broken trust. Your ability to gain new customers also becomes questionable.
Building a reputable brand takes decades, but a single breach is enough to ruin it overnight. Once customers feel that an organization lacks what it takes to secure their personal and financial information, it's game over. Security issues are also a deal breaker for prospective customers.
In short, consumers are loyal to brands that protect their personal data. If they perceive your business as unsafe, your organization's long-term viability in the industry becomes questionable.
Using security solutions that can report and track vulnerabilities ensures you act before a breach tarnishes your brand image.
3. Disruption of Operations
When a cyber attack hits your business, it disrupts processes. Customers, employees, and other stakeholders may be unable to access the system, bringing operations to a halt. Downtime affects customer experience, productivity, and profitability.
Companies should strengthen their cybersecurity. Otherwise, cybercriminals can use the following common types of cybercrime to break through an organization's defenses:
1. Phishing is an increasingly popular social engineering technique among attackers. Cybercriminals use fake communications that are seemingly from a trusted source, mostly via email.
Since the email appears legit, victims are tricked into providing sensitive details, typically on a scam website. Downloading attachments or clicking links on fraudulent communication can also install malware into the target's computers.
Phishing is the favorite technique of cybercriminals. That's why in 2019 it was the most common cyber attack in the United States affecting businesses.
2. Ransomware involves an attacker using malicious software to encrypt valuable information. Then asking for ransom in exchange for the decryption key. If you don't pay, the stolen information is sold on the dark web or made public. Attackers may use social engineering techniques to deploy ransomware.
3. Identity Theft occurs when a cybercriminal steal personal information such Social Security number and uses it in fraudulent activities.
4. Hacking involves exploiting technical weaknesses to penetrate your network security. Today, hacking has been automated, making it a great threat to businesses. Offensive or defensive cybersecurity solutions can help deal with such vulnerabilities.
Statistics of Cybercrime Costs
How much does cybercrime cost the global economy each year? What's the annual cost of cybercrime in the United States? Let's find out what the numbers say:
The Cost of Cybercrime in the U.S
Statistics from the National Institute of Standards and Technology (NIST) suggests that cybercrime costs the United States hundreds of billions, potentially as much as 1–4% of America's annual GDP (Source: NIST).
A 2021 FBI report says that out of 847,376 cybercrime cases reported in 2021, the losses amounted to nearly $7 billion. Among the received cases, business e-mail compromise (BEC) schemes, ransomware, and cryptocurrency scams were among the reported incidents. Out of the amount, BEC caused losses of nearly $ 2.4 billion. This figures skyrockets quickly if you factor in unreported incidents (Source: FBI Internet Crime Report 2021).
The Global Cost of Cybercrime
The global cost of cybercrime was estimated to surpass $8 trillion in 2022. The figure is expected to go beyond $11 trillion in 2023. Statistics predict that cybercrime will cost the global economy more than 20 trillion U.S dollars by 2026, a 1.5 times increase compared to figures in 2022 (Source: Statista).
The cybercrime industry is growing year after year. In 2021, it caused global damages that costed $6 trillion. The value is expected to grow by 15% annually over the next five years. By 2025, experts predict that the number will reach (and surpass) $10.5 trillion, up from $3 trillion in 2015 (Source: Cybersecurity Ventures).
The Cost of Ransomware
In 2020, ransomware cybercriminals had a smooth year. Businesses that paid ransom increased, as did the amount involved.
Cisco's statistics say that each ransomware victim paid more than $300k on average , an increase of 171% year over year. The biggest ransom a business paid in 2020 was $10 million, up by $5 million in 2019.
Beyond the ransom, the average cost of forensic investigation after a ransomware attack in 2020 was over $200k. After a ransomware incident, the estimated downtime was over two weeks. And each downtime incident costed a business over $280k (Source: Cisco).
The numbers speak for themselves: Cybercrime costs are pretty huge. In every industry, businesses are increasing their cybersecurity budgets striving to lower the devastating costs of a potential cyber attack. As we've seen from the stats, a breach could mean businesses loosing millions of dollars.
For some, the real costs cut even deeper. Some organizations never fully recover from a cyber attack because of potentially disastrous consequences— multiple, expensive law suits, heavy legal penalties, and irretrievably broken public trust.
How can you safeguard your organization and make it resilient against cybercrimes?
Protect Your Organization's Financial Health from Cybercrime with Evolve Security
What's the real cost of cybercrime? The dollar cost of cyber attack is just the tip of the iceberg. Your business's reputation can also be ruined, and its long-term viability questioned.
The road to cybersecurity is clear: Implement powerful cyber defenses. No organization is immune to the possibility of a security breach. It takes only a single breach to damage your IT infrastructure, steal data, disrupt usual activities, and threaten to leak sensitive data to the public.
For this reason, protecting sensitive information is the number one priority for digitally-enabled businesses. With security solutions that build resilience against human-targeted attacks and make it easy to recover from a breach, you minimize vulnerability—you ensure your finance, reputation, and business continuity are not on the line.
Evolve Security offers effective solutions and reliable expertise to strengthen and safeguard your business throughout the full security lifecycle. Some of our powerful cybersecurity solutions include:
- Penetration Testing: We put your cyber defenses to the test to identify weak points and recommend what you should do to mitigate vulnerabilities. Fixing security loopholes reduces vulnerability.
- Attack Surface Management: Cybercriminals use external surfaces of your network to plot an attack and break past your defense lines. This service from Evolve Security allows you to actively manage the visibility of your applications and systems to give you control over exposed surfaces of your IT infrastructure. As a result, you minimize vulnerabilities.
- Vulnerability Scanning: Prevention is better than cure. Our vulnerability scanning services help your business identify and fix vulnerabilities before attackers exploit them. That way, you boost security, increase compliance, and reduce risk.
- Cloud Security Assessment: We ensure your cloud environment supports our security, reporting, and compliance needs, ensuring efficient business operations.
Get started today with Evolve Security to learn more about our services and how our solutions safeguard your business against cybercrimes.