Justifying expenditures on cyber security can be difficult for some decision-makers. Most business owners want to invest in products and services that yield tangible results and have an apparent correlation with increased profitability.
The problem with spending money on cyber security is that the focus isn’t on increasing your cash flow or reducing expenses you see daily. The purpose of cyber security purchases is to prevent a massive financial loss from a single, unexpected incident.
On the surface, this makes it sound like it is complicated to estimate the ROI of your cyber security. Nothing could be further from the truth. When you look at the estimated potential loss of a cyber-attack, you will see that the ROI is straightforward to calculate. Defending your decision to invest in cyber security solutions is also effortless.
Calculating the expected value of your cyber security solutions
Estimating the expected value of your cyber security solutions is actually very easy. You just need to know the following two variables:
- The likelihood that your business will be the target of a cyber attack
- The expected loss of a successful attack
The global average for both of these figures is readily available. A stunning 61% of all small and medium-sized businesses have been targets of cyber attacks. The average attack that was successful costs these businesses a whopping $2,235,000!
Now you just need to do a simple expected value calculation, which you should have learned in business school. You just need to multiply the event’s probability by the event’s outcome.
This figure shows that the expected cost of a cyber security breach is $1,363,350. If you can develop a cyber security solution that prevents an attack, it will be worth well over $1 million.
You must also consider the cost of restoring data if you are lucky enough to survive. The good news is that developing a cyber security solution involves having a strategy.
Is this figure for real?
Many people who read this statistic have a difficult time believing it. They can’t possibly fathom that the average cyber security tech that is successful would cost nearly $2.5 million. The idea that cyber security solutions are worth over $1.2 million seems even more unfathomable.
Unfortunately, the statistics are authentic. If you are still skeptical, you need to look at the number of businesses that fail due to poor cyber security.
In previous articles we’re pointed out industry statistics showing that over 60% of small businesses that are victims of a cyber security breach are forced into bankruptcy within six months. We were sceptical at the time. However, after reading more about the cost, it is evident that these statistics are very consistent. If most businesses fail after a cyber attack, it is obvious that those attacks are costly. The average business cannot survive a loss exceeding $2 million.
This means you need to make investing in cyber security one of your priorities. Funneling that money into research and developing new marketing campaigns to penetrate new markets may be tempting. However, the opportunity cost is far too high. If you happen to be one of the companies targeted by hackers, it is almost inevitable that your company will be filing for bankruptcy within the year.
Don’t leave the fate of your business to chance. Have a solid line of defense against cyber criminals that came to destroy your livelihood.