via Security Intelligence
Attack volumes are up, and attackers are finding new ways to compromise corporate security. According to the HackerOne 6th Annual Hacker-Powered Security Report, ethical hackers found 65,000 vulnerabilities in 2022. What’s more, 92% of hackers said they could pinpoint weaknesses that scanning tools missed, making reliance on detection technology alone a dangerous prospect.
At the same time, the costs of a data breach are up. As noted by the IBM 2022 Cost of a Data Breach Report, the average cost of a data breach hit $4.35 million in 2022, up 2.6% from 2021 and 12.7% from 2020. In addition, just 17% of companies said it was their first data breach.
For chief financial officers (CFOs), the increasing impact of data breaches creates a paradox: While more spending is necessary to combat these challenges, this spending isn’t directly tied to profit. Instead, cybersecurity spending is all about return on investment.
Here’s what CFOs need to know about spending to save on security.
Accruing interest? The evolving impact of a data breach
The total cost of a data breach is measured in more than dollars and cents.
Consider a recent piece from The Washington Post, which notes that credit rating agencies are starting to factor in cybersecurity as part of business credit assessments. In other words, poor cybersecurity practices that result in breaches could lead to lower credit scores and impact the ability of a business to secure loans or other funding.
Or look at data from the IBM report, which found that 60% of organizations increased their prices as a result of a data breach. It makes sense: Higher prices could help offset the increased spending that occurs during and after a data breach. Increase prices too much, however, and consumer interest may drop.
Speaking of consumers, they’re less willing to share personal data with companies that suffer data breaches. In fact, 40% of consumers said they “always or often” stopped doing business with companies that couldn’t protect their personal data.
Compliance is also a critical concern. If companies can’t demonstrate due diligence in addressing security threats with effective policies and practices, they may be on the hook for monetary fines or operational penalties.
Understanding and implementing the protective pair model
For CFOs, avoiding the costs of a data breach — from initial spending to compromised credit ratings and falling consumer trust — means spending on security technologies. For these technologies to be effective, however, they must target specific concerns.
This is the core of the protective pair model: pinpointing specific threat(s) and matching them with solution(s) that effectively mitigate the impact. Here are a few examples.
Social Engineering Attacks
Pair with: Zero trust and the principle of least privilege
Social engineering attacks leverage human nature to help hackers compromise key systems. These attacks often combine social reconnaissance with email and website spoofing to convince staff members they should click on links or provide login and password information.
Spending on solutions such as zero trust can help companies avoid this social sting. This could be as simple as implementing two-factor authentication (2FA) solutions that prevent attackers from compromising systems even if they obtain user login data, or the use of behavior-based analysis to determine if users may not be who they say they are.
Pair with: Artificial intelligence and automation
AI and automation can help limit the impact of hacker efforts to uncover new vulnerabilities. Instead of relying on standard metrics and measurements to assess potential risk, AI tools are capable of learning over time to uncover vulnerabilities that traditional scanners may miss. Automation, meanwhile, reduces the time required to address and remediate these issues.
As noted by the Cost of a Data Breach report, companies using AI and automation saved $3.05 million during a data breach compared to those without these tools and also shortened their breach identification and containment times by 2.5 months.
Increasing Data Breach Costs
Pair with: Hybrid cloud
While 45% of all data breaches happened in the cloud, those in hybrid clouds were less expensive than their public and private counterparts. Consider that in private clouds, the average cost of a data breach was $4.24 million, and in public clouds, this cost rose to $5.02 million. In hybrid clouds, meanwhile, the average cost was just $3.80 million.
Four steps to spending success
A four-step approach can help CFOs find the right security solutions for their companies, and help cyber spending drive sustainable returns.
1. Find Your Weak Spots
First, CFOs need to coordinate with security professionals to pinpoint high-priority weak points. For example, if IT teams discover that the current network infrastructure relies on vulnerable open-source software, spending should target this risk.
2. Understand the Impact
Next, CFOs should understand the scope of impact tied to a successful breach. This can include monetary costs for detection and remediation along with spending to shore up customer confidence, such as paying for credit monitoring or other services that help regain lost trust.
3. Pick the Right Pair
Equipped with priorities and impact assessments, CFOs need to pick the right tools for the job. By targeting a specific security concern, finance officers can make the most of corporate spending and set the stage for further investment.
4. Give Security a Seat at the Table
Finally, CFOs need to advocate for their cybersecurity counterparts to get a seat at the boardroom table. Not only does this make it easier for C-suite members to understand the scope of security issues, but in some cases is a regulatory requirement.
For example, under New York State Department of Financial Services regulation 23 NYCRR 500, financial services firms with more than 10 employees and $5 million in gross annual revenue must employ a chief information security officer (CISO) or face potential penalties for non-compliance.
Hey, big spender
Given the evolving impact of data breaches on company finances, consumer trust and corporate compliance, increased security spending is a necessity for CFOs.
With the right approach to tools and technologies, however, finance officers can help their organizations save time, money and effort. In other words, cybersecurity spending isn’t simply a single cost: it’s an investment in ongoing success.