Financial Impact - Ponemon Average Cost of Data Breach Small Business - Company -Wikipedia of Finance

What is the Average Cost of Data Breach for Small Business or Company?


If you’re running a business in today’s digital climate, you’re statistically more likely to experience a data breach than to catch the flu. The size of your company can’t protect you – cybercrime attacks both large corporations and small startups. The easier the target, the better. Here’s we will show that how much a data breach could cost you as well as what is the average cost of data breach for small business or company and what is the financial impact of data breach for your business company, according to research:

The Average Costs for Data Breach is Around $3,86 Million

Sponsored by IBM Security but independently conducted, a new study by a research team from the Ponemon Institute – the 13th annual Ponemon Cost of Data Breach Study – calculates that the average breach in 2018 cost around $3,86 million. That was 6,4% more expensive than in 2017.

This means that a business would have to pay $148 for each compromised record. To make things more pricey, bigger data breaches cost more.

A mega-breach with 1 million compromised records would probably cost around $39.49 million. And the growth is exponential. For 50 million compromised records, for example, a company would have to set aside about $350.44 million. That’s enough money to ruin a business.

Data Breach Costs Depend on Several Factors

There are many factors that we need to add to the equation:

  •  The type of attack;
  • The geographical location of the company;
  • The speed with which the breach is contained;
  • The use of mobile and IoT devices.

Researchers from the Ponemon Institute have done the math with three different types of attack in mind: criminal or malicious attacks, human error, and system glitches. The most expensive among them and the most common one at the same time is a criminal attack.

When it comes to the geographical location, it costs way more if a business’ records get breached in the US, than in Brazil or India. This is because everything costs more in the US, including detecting the breach, hiring a lawyer, and carrying out an investigation.

If a company fails to contain a breach within the first month, the math is as follows:

For every ten days more, a company would need to pay up an additional $1 million, at least. If they manage to contain the breach during the first 30 days, the average cost would be reduced to $3.09 million. Otherwise, the business would need to pay $4.25 million.

For every mobile or Internet of Things (IoT) device involved, the price gets steeper for additional $10 per compromised record. If some of these devices get lost or stolen, resulting in a data breach, a company would need to pay up an additional $6,5 per lost or stolen device. In such scenario, you may have to look forward towards other sources of equity finance as well as sources of debt finance to set-off against losses.

Customer Trust Is the Most Expensive Loss

How much a business will lose in the aftermath of a data breach ultimately depends on how many customers they manage to keep. According to the Ponemon study, companies that lose less than 1% of their customer pool have an average expense of $2.8 million.

But losing more than 4% of existing customers costs $6 million on average.

One way to mitigate this is to provide identity protection to data breach victims. In some cases, however, having a senior-level executive such as chief information security officer or chief privacy officer address the victims’ concerns is enough to regain public trust.

Protecting a Financial Impact from Data Breaches

Along with cybersecurity software, company-wide awareness and continual employee training are the most effective methods against detrimental data breaches. In addition to this sturdy combination of technology and awareness, security experts recommend the following:

  • Controlling who gets access to the data;
  • 24/7 cyberthreat monitoring;
  • Automate data backup and recovery;
  • Using a VPN for encrypting data (Android);

Whether a business keeps their data in-house or in cloud-based storage, the importance of encryption cannot be over-stressed. If employees are using private devices from an office network, companies need to make sure that they are encrypting their traffic with a Virtual Private Network.

Data protection requires multiple preventive measures because there are many potential entry points that lead to business records. When it comes to data breaches, a multilayered approach based on data encryption and limited access yields the best results.


The 13th annual Cost of Data Breach Study will hopefully highlight the immense importance of staying protected against data breaches. Now that you know that being reckless with your records can cost up to $4 million, you’ll certainly want to do something about it.

Start by raising awareness and educating your employees.

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