The price of just about everything is rising. The US just recorded an annual inflation rate of 9.1% in June, which is the highest rate since November of 1981. This forty-year high is affecting people from all walks of life throughout the country. Businesses are getting hit with price increases for their product inputs across the board on top of frustrating supply chain issues that have been steady for months. Inflation presents many challenges, and the economy appears headed towards uncertain times soon.
A question… But does inflation have a direct impact on cybersecurity? More specifically, does your business need to make any changes within its data security planning and response approach because of current economic conditions? Let’s take a look at both of those questions here to provide insight into how inflation might impact cybersecurity costs and why your having a plan in place is essential to help navigate any potential issues before, during, and after those appear.
Cybersecurity Costs Steadily Increase
Cybersecurity costs have been on a steady rise in recent years. This trend follows increased cybercrime in general and isn’t necessarily directly related to the current elevated rate of inflation. Some estimates indicate that total global cybercrime costs will reach $10.5 trillion by 2025. These figures represent an average year-over-year growth of 15%, which outpaces inflation even at the historically high rate it stands at upon this writing. It’s an alarming statistic and will certainly have wide-ranging effects, but it isn’t tied to the state of the economy as much as it is to the state of cybercrime worldwide.
Recent numbers also show how ransomware incidents targeting businesses are headed toward astronomical figures. Ransomware costs are now projected to cost victims over $265 billion per year by 2031. To put this into perspective, these incidents only amounted to $325 million in 2015. And even though that projected 16-year increase approaches a 100X rise, some experts and other reports call it a modest estimate. The Verizon Data Breach Investigations Report showed a 13% increase in ransomware attacks from 2020 as compared to 2021, which is the highest it’s ever been. This rate also outpaces inflation and marks a greater rise in a single year than the previous five years combined.
Hackers Experience Inflation Too
Any business owner or individual out there who has experienced data theft, identity fraud, or other cybersecurity issues firsthand is sure to have a strong negative opinion (to put it mildly) about hackers and other cybercriminals. These bad actors don’t have many, or any really, morals when it comes to who they target or the damage they inflict. But as much as you might not like to hear it, hackers are people just like you and me. They must fill up their gas tanks, buy groceries, and pay the rent or mortgage. They feel the same effects of rising costs caused by inflation, and many of them live or operate in locations hit hard by economic conditions.
Hackers don’t deserve any pity or sympathy here, but you can expect the rising costs they also experience to have at least some effect on the costs of your business’s cybersecurity. Inflation might cause them to make a higher ransomware demand than they would have last year, or maybe they will perpetrate attacks more frequently to generate extra income. There aren’t precise statistics for the daily spending habits or cybercrime budgets of hackers to provide with this prognosis. But just like your favorite takeout restaurant charging extra for that popular dish because ingredients are more expensive, expect hackers to do the same when they attack your business.
Economic Uncertainty is an Advantage for Cybercriminals
Businesses of all sizes and sectors are affected by the current economic situation. It’s an unsettling and uncertain time for many, with owners and CEOs doing all they can to keep the business’s doors open and the day-to-day operations in line moving forward. The forecast for more inflation and possible recession is sure to keep weary business owners up at night wondering how to best navigate the situation. Unfortunately, this uncertainty plays right into the hands of cybercriminals by giving them an advantage when it comes to finding and then targeting vulnerabilities in cyber defenses.
If a business appears to be struggling, whether through reported profits or limited cybersecurity efforts, it is likely to become an easier potential target for criminals. It’s not a stretch to think that attacks on small and medium-sized businesses more heavily impacted by inflation will increase because of these vulnerabilities. Criminals of all kinds often go after the easiest victim, knowing that a payday is more likely with that type of target in the crosshairs. With economic factors exposing potential vulnerabilities in their targets, cybercriminals can focus on businesses that they believe to be underprepared or out of sorts. And the results can be disastrous for those organizations facing perilous times with little room for error.
Cutting Costs on Cybersecurity Protection is a Bad Idea
Cutting costs is a natural approach to handling inflation. You combat rising prices by eliminating some of the line items or supplies within day-to-day operations that don’t seem as necessary. This can be an effective tactic for hard goods, shipping costs, or other hands-on aspects of your business, but it’s a dangerous approach if you’re considering cutting cybersecurity protection efforts.
If you are not prepared for a data breach or other cyber-attack, the costs associated with such an event can doom a business already struggling to get by. Around 60% of small businesses that experience an attack go out of business within six months of suffering that attack, and that stat was observed before current economic conditions set in. That’s why having a data security and breach response plan in place is so crucial for the survivability of your business.
The average fee rate of cybersecurity services is rising as well, and although this might seem like a potential cost that can be cut, the risks of doing so far outweigh any potential savings. The possibility of dealing with an attack without assistance is very likely without these services, and the results of that are grim at best. Regardless of inflation or any other boom or bust economic cycle to come, cybersecurity costs are here to stay and need to be a constant element of your essential budget for every business now and in the near future.
LibertyID provides full service, fully managed identity fraud restoration to its subscribers. With a 100% success rate in resolving all 31+ forms of identity fraud. LibertyID Business Solutions provides Business fraud remediation, full pre-breach preparation with custom WISP protocols, post breach regulatory response, customer, and employee identity fraud restoration management, advanced employee training and third-party vendor management tools.