These days, millions of small business owners nationwide store large amounts of critical data for themselves, their customers, and their clients, and all that can put them at far greater risk for a data breach that could prove rather costly. That, in turn, may increase their necessities for having tech insurance.
A number of studies have recently shown that small businesses in particular are vulnerable to data breaches for a number of reasons, and new data indicates that these incidents can be extremely costly going forward, according to the 2013 Cost of Data Breach Study: Global Analysis from security firm Symantec and research giant the Ponemon Institute. For instance, the average cost of a data breach suffered in the U.S. actually dropped from 2011, to a total of $5.4 million; that’s a large price tag, and one that may prove difficult – if not impossible – for even successful small businesses to bear.
Meanwhile, the average cost per record exposed, which obviously will vary depending upon the size of a small business affected by such an incident, increased to $136, the report said. This means a breach that exposed just 1,000 records would carry an average cost of $136,000.
Interestingly, though, while many small business owners may worry about the sensitive data they protect being compromised as a result of a hacking incident or other type of malicious attack, the fact of the matter is that most of these incidents are caused by either human error or malfunctioning systems, the report said. Altogether, this accounted for 64 percent of all breaches suffered around the world.
“While external attackers and their evolving methods pose a great threat to companies, the dangers associated with the insider threat can be equally destructive and insidious,” said Larry Ponemon, chairman of the Ponemon Institute. “Eight years of research on data breach costs has shown employee behavior to be one of the most pressing issues facing organizations today, up 22 percent since the first survey.”
The cost of hacking attacks is higher, though
While malicious data breaches were far less common than those that came as a result of a mistake made by an employee or computer system, the price tag associated with remediating these errors was typically far larger, the report said. In the U.S., these attacks cost $277 per record exposed to fix, more than double the average cost seen around the world for all types of breaches.
However, companies can reduce these costs significantly by being more proactive in dealing with security measures, having a plan for handling such incidents before they strike, and retaining a computer security expert, the report said. The latter may not always be possible for small businesses because of the cost involved with employing this type of dedicated worker, but that certainly doesn’t preclude their putting into place comprehensive security measures on all their security systems, educating employees about what constitutes data breaches and the best ways to prevent them, and drafting comprehensive plans to deal with the potential fallout of any such incidents.
Small business owners whose companies protect this type of vital data should certainly consider the ways in which small business insurance to shield them from data breach costs will be beneficial to them. With the average price tag of dealing with such an incident being so high, having measures in place to help cover them can typically help keep independent companies afloat even when they have to pay out large sums to fix the problems these breaches can cause.