IBM: Average Cost of a Healthcare Data Breach Reaches Record High of $10.1 Million
The average cost of a healthcare data breach has reached double digits for the first time ever, according to the 2022 Cost of a Data Breach Report from IBM. The average cost of a healthcare data breach jumped almost $1 million to a record high of $10.1 million, which is 9.4% more than in 2021 and 41.6% more than in 2020. Across all industry sectors, the average cost of a data breach was up 2.6% year over year at $4.35 million, which is the highest average cost in the 17 years that IBM has been producing its annual cost of a data breach reports and 12.7% higher than in 2020.
The report is based on a study of 550 organizations in 17 countries and regions and 17 different industry sectors that suffered data breaches between March 2021 and March 2022. For the report, IBM Security conducted more than 3,600 interviews with individuals in those organizations. 83% of organizations represented in the report have experienced more than one data breach, and 60% of organizations said the data breach resulted in them having to increase the price of their products and services.
Summary of 2022 Data Breach Costs
- Global average cost of a data breach – $4.35 million (+2.6%)
- Global average cost per record – $164 (+1.9%)
- Average cost of a U.S. data breach – $9.44 million (+4.3%)
- Average cost of a healthcare data breach – $10.1 million (+9.4%)
- Average cost of a ransomware attack – $4.54 million (-1.7%)
- Average cost where phishing was the initial attack vector $4.91 million
- Average cost of a $1 million record data breach – $49 million
- Average cost of 50-60 million record data breach – $387 million
For the first time in at least six years, the biggest component of the data breach costs was detection and escalation, which cost $1.44 million in 2022, up from $1.24 million in 2021. Next was lost business, which cost an average of $1.42 million in 2022, down from $1.59 million in 2022. Post-breach response increased slightly from $1.14 million in 2021 to $1.18 million in 2022, and there was a small increase in notification costs, which rose from $0.27 million in 2021 to $0.31 million in 2022.
On average, 52% of the breach costs are incurred in the first year, 29% in the second year, and 19% after two years. In highly regulated industries such as healthcare, a much larger percentage of the costs are incurred later, with 45% of costs in the first year, 31% in year 2, and 24% later than year 2, which was attributed to regulatory and legal costs.
The average time to identify a data breach was 207 days in 2022, down from 212 days in 2021. The average time to contain a data breach was 277 days, down from 287 days in 2021. A shorter data breach lifecycle (time to identify and contain a breach) equates to a lower breach cost. Data breaches with a lifecycle of fewer than 200 days cost 26.5% ($1.12 million) less on average than data breaches with a lifecycle of over 200 days.
One of the most important steps to take to improve security is to adopt zero trust strategies, but only 59% of organizations had adopted zero trust, and almost 80% of critical infrastructure organizations had yet to implement zero-trust strategies. The average breach cost for critical infrastructure organizations without zero trust was $5.4 million, which was $1.17 million more than those that had implemented zero trust strategies.
Cost of Data Breaches by Breach Cause
The report explored the different initial attack vectors and found that the most common entry route was the use of stolen credentials, which accounted for 19% of all data breaches, with these data breaches costing an average of $4.5 million. Phishing attacks accounted for 16% of all data breaches, and phishing was the costliest attack vector, with an average data breach cost of $4.91 million, closely followed by business email compromise attacks, which accounted for 6% of all data breaches and cost an average of $4.89 million. Cloud misconfigurations accounted for 15% of data breaches and cost an average of $4.14 million, and vulnerabilities in third-party software accounted for 13% of data breaches and cost an average of $4.55 million per breach.
The average cost of a ransomware attack fell slightly by 1.7% to $4.54 million, not including the cost of the ransom itself. Ransomware attacks increased significantly in 2022 and accounted for 11% of all data breaches, up from 7.8% of data breaches in 2021. Ransomware attacks took 49 days longer to identify and contain than the global average, taking an average of 237 days to identify the intrusion and 89 days to contain the attack. Paying the ransom only saw a $610,000 reduction in data breach costs, on average, not including the amount of the ransom. Since ransom amounts are often high, the report indicates that paying the ransom does not necessarily lower the breach cost. In fact, paying may well increase the cost of the breach.
Around one-fifth of data breaches were the result of supply chain compromises. The average cost of a supply chain compromise was $4.46 million, which was 2.5% higher than the overall average cost of a data breach. It took an average of 235 days to identify the breach and 68 days to contain the breach – 26 days more than the average data breach
45% of data breaches occurred in the cloud, with data breaches in the public cloud costing considerably more than data breaches with a hybrid cloud model. 43% of organizations that experienced a data breach in the cloud were in the early stages of their migration to the cloud and had not started applying security practices to secure their cloud environments. Organizations in the early stages of cloud adoption had data breach costs of an average of $4.53 million, whereas those at a mature stage had average breach costs of $3.87 million.
Data Breach Cost Savings
IMB identified several steps that organizations can take to reduce the financial cost and reputational consequences of a data breach. The main cost-saving elements were:
- Fully deployed security AI and automation – $3.05 million
- Incident response team with regularly tested IR plan – $2.66 million
- Adoption of zero trust – $1.5 million
- Mature cloud security practices – $720,000
- Being fully staffed vs insufficiently staffed $550,000
- Use of extended detection and response (XDR) technologies – 29-day reduction in response time