There has been rising cybersecurity costs and how to handle them has become extremely important as IT budgets become even more thin.
An increase in the cost of cybersecurity systems, solutions, and staff over the last few years has resulted in 11 percent of companies are expected to spend more on security and risk management in 2023 than they did in 2022. All following numbers are based on a recent Gartner report.
It is evident that IT environments are at risk if spending remains the same. The funding for other projects may be affected if they budget more money for cybersecurity than they do for other projects.
Is there a reason why cybersecurity costs are going up?
There are several reasons why cybersecurity costs are increasing in the world today.
Firstly, there are several regulations that are constantly changing, such as the new White House cyber strategy, for instance. Specifically, Utility Dive reports that the strategy recommends that organizations build a proactive cybersecurity strategy that will support interconnected hardware and software that is integral to the future of industries such as energy. The fact that many enterprises continue to rely on legacy systems to support key functions, however, means that upgrading to proactive processes may come at a significant cost compared to relying on legacy systems.
There is an increasing concern among customers regarding the security of their data even though private companies are not subject to the same regulations as public companies. It was reported by TechRepublic that 45% of respondents would stop doing business with an organization after a successful cyberattack had taken place. Consequently, enterprises are likely to spend more money on proactive cybersecurity frameworks to comply with government regulations or satisfy the expectations of their customers in the future.
Staffing is still one of the biggest concerns in the organization. An assessment conducted by the World Economic Forum (WEF) in 2022 found that 59% of companies lacked cybersecurity skills and were concerned about their ability to handle a cyberattack. It is time consuming as well as expensive for organizations to recruit new employees. There is no doubt that it is essential for businesses to create hiring strategies that go beyond salary to demonstrate how hiring security professionals can have a positive social and cultural impact on the company.
What is the best way for companies to manage the new cybersecurity expenses?
Companies must pay to stay protected – prices are going up and companies must pay to stay protected. In spite of the fact that executives do not want to hear this news, all is not lost. You can manage the costs associated with cybersecurity by following these four strategies.
A rise in the end user’s cost of goods and services
By passing on the increasing cost of cybersecurity to end users, the increase in cybersecurity costs can be balanced. As a result of raising the costs of products and services, companies may be able to cancel out some of their budgets and break even.
Despite the pros and cons of this approach, there are still some things that need to be considered. In order to balance the new spending, some small price increases may have to be made across the board. In regards to the disadvantages, companies must be aware of the evolving impact of a recession on their business. You may find that consumers who are budget-conscious will simply take their business to one of your competitors if your prices are too high, resulting in a net loss for your company.
Cost internalization is one of the way to control cybersecurity costs
There is also the possibility of spending a greater amount of money on cybersecurity and covering the costs internally. In spite of the initial cost, many security solutions are able to pay for themselves over time.
The cost savings that organizations enjoy come in the form of preventing incidents that could potentially cripple them if they had not been prevented. In 2022, it is estimated that the average cost of a data breach in the United States would be $9.44 million. As a result of cybersecurity spending, companies will be able to save a substantial amount of money if they avoid attacks. Is there a caveat to this statement? The C-suite must be on board with this approach in order for it to be successful.
As a priority, organizations need to realign their cybersecurity digital strategy
As businesses embrace digital transformation, they may also be able to reduce the impact of increased cybersecurity spending on the bottom line. When some or all of the storage server management functions are transferred to the cloud, the company may be able to eliminate the need for physical data centers and the associated costs such as rent, power, and security that are associated with them.
Furthermore, cloud-based solutions can be scaled on a need-to-know basis. As a result, companies are no longer required to purchase extra, unused servers in order to handle sudden spikes in traffic or bandwidth requirements due to sudden spikes in traffic. As a result of reducing costs on these digital shifts, cybersecurity budgets can be balanced in a more efficient manner.
What you need to know about cybersecurity managed services
It has been found that one way to control cybersecurity costs is to switch to a model of managed security services. I have found it to be especially helpful for smaller companies or for those that are having difficulty finding cybersecurity personnel. It is possible to reduce the risk of security incidents in enterprises by working with a trusted third-party provider without having to hire, train, and compensate a full-time security professional.
There is also the option of managed services, which allows companies to select services based on their specific concerns. As a result, it allows organizations to develop predictable, reliable budgets that are only altered by the addition or removal of services, and are not affected by any other factors.
An analysis of the economic impact of cybersecuirty insurance
It is estimated that half of American companies have cyber insurance, according to Statista data. Further, over the next five years, there is a strong chance that the market will grow at a rapid rate.
There has been a rapid increase in cyberattacks, however, which has prompted companies to file claims for cyber insurance as a result. This has led to an increase in the cost of cyber insurance as a result. Cyber insurance costs in the United States increased by 79% in the second quarter of 2022 compared to the first quarter.
As a result of shifts in insurance companies’ responsibilities, businesses are also becoming more responsible for claims that are successful. It is common for insurers to refuse to issue policies until organizations demonstrate that they are using strong encryption and a robust identity management system before they will issue the policy.
Before purchasing insurance that is designed to protect against cybersecurity incidents, it is thus essential that policies and practices are aligned with the expectations of insurers.
From obligation to investment, there is a transition period
As attack volumes continue to rise, regulatory regulations and customer expectations continue to evolve, as well as staffing shortages persist, cybersecurity costs are likely to continue to rise soon.
This has resulted in an increase in spending on security for organizations as a result. Even though it’s impossible to avoid these obligations, cybersecurity spending can be viewed as an investment – one that reduces the risk of successful attacks, builds trust among customers, and enhances IT operations as a whole.
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