As new data breaches are making the headlines, cybersecurity is becoming one of the most critical elements of a long-term business strategy. To protect their sensitive data and mitigate potential risks, businesses are actively looking for ways to move into the 21st century in terms of their infrastructure. However, as many soon discover, cybersecurity integration within an existing business is rarely a one-click solution.
Even putting all the technical questions aside, cybersecurity raises many questions regarding return on investment. This article will provide a broad overview of how to approach cybersecurity spending. We’ll briefly cover what makes up cybersecurity costs, what factors could affect them, the financial impacts of cyberattacks, potential benefits, and some guidelines on approaching cybersecurity estimates in your company.
Costs of cybersecurity
Cybersecurity spending can mean several things. The exact route will depend on the actual business case and the risks that the company is trying to mitigate. Still, no matter which options your company is considering, this is something where budget constraints will have to become a consideration.
One of the go-to routes for organizations looking to shield themselves against cyberattacks is purchasing cybersecurity hardware or software solutions. This allows companies to flexibly integrate them into the infrastructure, strengthening the areas needing attention.
As such, businesses have numerous options available. Cybersecurity hardware and software provide easy access to firewalls, antivirus, access control mechanisms, intrusion detection and prevention systems. When used collectively, these technologies work together to halt cyberattacks or mitigate their impact if they do occur.
While it’s also true that their costs depend on various factors (which we will address later on), let’s look at the average industry costs associated with various cybersecurity solutions. Please note that the distinction between solutions and services isn’t as set in stone as it used to be due to modern service delivery models (like SaaS) and the popularity of cloud computing.
If an organization relies on a network, a firewall is a must as it monitors and controls network traffic. Acting as a barrier between the internet and/or other untrusted networks and your private network, it’s the first defense against malicious connections based on predefined rules.
The tricky part for the comparison is that they can be implemented at different levels of the network stack, i.e., from the network layer (filtering packets) to the application layer (proxy servers). Finally, they can be hardware or software-based, or a combination of both, affecting the final price tag.
Therefore, an average firewall configuration can range between $450 and $2,500 (as a one-off investment not factoring in its maintenance which costs extra). That doesn’t take into account setup or maintenance costs, so the final cost can be higher.
Antiviruses are still staples to protect computer systems from malware, viruses, and other security threats. As an essential component of comprehensive cybersecurity strategy, they can be used as the last line of defense. Usually, in business settings, they’re deployed across an organization’s network to protect all connected devices.
It’s often the case that antiviruses also include additional features like firewalls, intrusion prevention systems, and email filtering to provide further protection against cyber threats. This also makes our comparison more difficult.
Still, if we’re looking for rough estimates, which is what we’re doing here: basic antivirus usually costs between $3 and $5 per user and $5 to $8 per server monthly. While the final price tag will entirely depend on your organization’s size, the estimate could be at least $30 a month if you have around five users.
Business communication primarily still takes place over emails. This is something that hackers are exploiting in phishing attacks. For this reason, having spam filters is essential to identify and block harmful emails before they end up in employees’ inboxes. Spam filters rely on various technologies to analyze the content and metadata of incoming messages to determine whether they are legitimate.
Some email providers offer spam filters already integrated into their suite. Meanwhile, for other cases, it’s required to set up a spam filter on top of it. It’s estimated that the price for this ranges between $3 – $6 per user per month.
What makes cybersecurity services different from cybersecurity solutions is that they’re typically provided by a third-party provider, who may offer the service on a subscription basis. While a cybersecurity service may include various cybersecurity solutions, the two concepts are not interchangeable. Cybersecurity service by definition encompasses ongoing protection against cybersecurity threats.
Frequently this also means that cybersecurity services can help against threats of greater sophistication. This makes them a good pick for organizations looking into securing their digital assets and preventing unauthorized access, theft, and exploitation of sensitive information.
With plenty of employees working remotely, businesses need a secure way for their employees to access company resources. VPN encryption seals the sensitive data in a secure tunnel, enabling secure exchanges to the company’s network. This additional protection layer also helps mitigate cyber threats by masking the user’s IP address.
Yet, as with most cybersecurity components, there are multiple routes to consider here. A VPN could be set up as a hardware stack with ongoing third-party maintenance fees or a software-only solution. This is something that can skew the price.
While the software-only is cheaper and can be up to $10 per user, the hardware setup can range up to $3,500 per device. That’s a significant gap between them, while both options provide similar functionality. The particular business case will be a deciding factor.
Consulting and testing
Cybersecurity consulting and testing service providers have a high level of expertise in identifying and mitigating security risks. This is something that few companies can manage to achieve out of their own resources. Specialized cybersecurity professionals perform various checks to properly evaluate the used cybersecurity measures’ effectiveness and outline the most critical areas.
Due to the nature of their services, this can be a pretty expensive endeavor. A vulnerability assessment for a network with up to three servers would cost $1,500 to $6,000. It goes without saying that if the scope of investigations needs to be broader, this will only add up to the final price tag.
Endpoint detection and response
Businesses turn to endpoint detection and response (EDR) services because they provide high protection against cyber threats by monitoring and detecting potential security breaches. This allows businesses to detect and respond to cyber threats quickly and before they cause significant damage to the organization’s assets, reputation, and financial standing. EDR solutions typically operate through a combination of software agents and cloud-based systems.
Endpoint detection and response solutions cost around $5 to $10 per month per device. Yet, as with most subscription-based services, there are discounts: with more devices, EDR usually becomes cheaper per single device. Still, EDR solutions come in different depths and feature sets, so the final cost can be higher.
Personnel is one of the most important cybersecurity assets at any company’s disposal. These specialists will protect your data from various forms of cyberattacks and ensure the risks are minimal. Whatever cybersecurity solutions or services you’ve purchased, the IT personnel will set up and maintain those tools.
Cybersecurity doesn’t become an integral part of an organization’s DNA just by purchasing some subscriptions. It needs to be cultivated. One way to ensure this is sustainable is to develop security policies and protocols — exactly what cybersecurity personnel will do.
Network administrators are responsible for setting up and maintaining the organization’s network infrastructure. They must ensure the network is secure from unauthorized access and that all transmitted data is protected from interception and other potential threats. The administrators will be configuring and managing firewalls, blocking specific ports, managing user permissions, monitoring the network, and patching system components.
As for their cost, you can look at conflicting data sources: depending on the region, experience, market saturation, and other factors. Still, if we’re looking for a broad view based on data from Payscale, this should be within $63,244 per year.
Compliance officers are specialists who ensure an organization’s cybersecurity by implementing policies and procedures to align compliance with regulations and industry standards. They identify risks, monitor security measures, and ensure employees follow security protocols. These key people outline how an organization should handle sensitive data, access controls, and incident response.
A compliance officer’s salary is $73,255 a year based on publicly available data. Mind you, compliance is one of the trickiest landscapes to navigate, so these specialists must periodically refresh their knowledge to stay updated with the latest policy changes.
Security analysts identify potential threats to an organization’s network, systems, and data. They’re using various tools and techniques to detect and prevent cyberattacks before they can cause damage. Security analysts identify vulnerabilities in an organization’s systems and infrastructure by conducting risk assessments.
Security analysts are crucial in protecting an organization’s assets and cyber threats. Based on Glassdoor data, their salaries, on average, are around $90,283 a year. Due to the increased frequency and complexity, professional cyber security analysts are in high demand, which can further increase their salaries.
The cybersecurity landscape is constantly changing. Therefore employees’ skills and knowledge need to be periodically refreshed. This is where cybersecurity training and certifications ensure that employees know the best practices for protecting this information and can identify potential threats. These trainings can be expensive, and organizations must ensure they are effective.
Cybersecurity courses can be an invaluable resource in helping to understand the importance of protecting company data from cyberattacks. By teaching employees how to identify potential security threats and how to take preventative measures, companies can reduce the risk of data breaches and protect their sensitive information. Nowadays, there are plenty of resources, ranging from in-person training to online lectures.
For this reason, cybersecurity training costs vary significantly and can range from freely available online resources to $5,000 or more. Mind you that the price is affected by factors like depth and competencies. Courses intended for niche specializations will always cost more than a basic introduction.
Cybersecurity certifications provide credibility to professionals working in the field, demonstrating that they have met rigorous standards and have the necessary knowledge and skills to protect against cyber threats. Using certification as a standardized measure allows aligning the team and ensuring that best practices are applied when making organization-level cybersecurity improvements.
There are several popular cybersecurity certifications widely recognized in the industry. For example, the Certified Information Systems Security Professional (CISSP) exam costs around $699. Certified Ethical Hacker (CEH), another important pick for cybersecurity professionals, costs around $1199. Along with GIAC Security Essentials (GSEC) certification and exam, it’s priced around $1699, which makes it one of the more expensive courses.
Factors that affect cybersecurity costs
It’s important to note that the cybersecurity costs provided in the previous section are only rough estimates. The final price will depend on numerous factors, which will be the key differentials from business to business when calculating cybersecurity costs. Let’s look at some of them to see how they factor into the final price tag.
The size of an organization is one of the most important factors which can drastically alter cybersecurity costs. As larger companies have more complex IT infrastructures, more employees to train, and a higher risk of cyber attacks due to their visibility and financial resources — their security naturally costs more. When compared to smaller organizations, the difference might be night and day.
Keep in mind that, in some cases, some cybersecurity tools will need to be adjusted. They cannot operate that well when used in corporate settings, which are within a completely different pricing category. However, numerous reports confirm that small businesses are three times more likely to be targeted by cybercriminals than larger companies. So while the risks remain high, not all companies are as well equipped to tackle the potential risks.
The industry in which an organization operates and any regulatory requirements it must comply with can impact its cybersecurity costs. Organizations working in highly regulated industries like healthcare and finance will have higher cybersecurity costs because more regulations apply to the data they’re holding.
As a side note, the industry determines an organization’s risk tolerance. Different industries can have very different thresholds for acceptable risk levels. This means that security’s scope will have to be aligned, which will also, in turn, affect cybersecurity costs. In addition, businesses in certain industries seem to fall victim to more cyberattacks than others, which is also a factor.
Financial impact of cyber attacks
While up until this point, you got the impression that cybersecurity is expensive, let’s move on to an overview of the financial impact of cyber attacks. Depending on what business operations are targeted, the attack scope, and the kinds of data leaking to the public, all constitute significant financial losses. Let’s look at revenue losses, legal fees, and reputational damage.
Cyberattacks can disrupt normal organizations’ day-to-day operations and compromise sensitive data. This can easily make an organization’s systems and networks inaccessible or unusable. The downtime when the IT team is trying to patch together a solution and get the operations back up and running costs time, which also translates into lost revenue.
The recovery costs can also be factored in as damaged equipment needs to be replaced, and systems need to be restored from the backups. It’s not a coincidence that a quarter of companies that have experienced a cyber attack have lost between $50,000 and $99,999 in revenue. These are steep numbers, and they don’t factor in the costs of getting the operations back up and running.
After data breach remediation and operations restoration, the trouble isn’t over. Especially in cases of a large data breach, companies need to hire legal counsel, forensic experts, and other professionals to help manage the aftermath. So there’s the precedent of estimation and cleaning up.
Additionally, depending on the data breach’s severity, the company may also be held responsible for the damage suffered by affected customers or clients. If there are lawsuits, this can quickly mount legal fees, including settlement costs. For smaller companies, that’s an instant endgame as they often just aren’t equipped to handle such expenses. For instance, it’s estimated that legal costs range from $50,000-$148 million, with a median of $1.6 million and a mean of $13 million.
A data breach leaves a permanent black mark on a company’s reputation. Companies will need to spend a lot of resources to repair their image and reassure the customers that they have learned from their mistakes and won’t happen again. This long process involves public statements and social media management and should be an aspect of long-term customer trust remediation.
According to various reports, the proportion of the total costs that can be attributed to reputational costs like abnormal customer turnover and loss of goodwill was around $1.57 million. Mind you that this is something that affects companies for a long time, provided that a company even makes a recovery from a data breach.
Benefits of cybersecurity spending
Cybersecurity spending can minimize various risks associated with revenue, reputation, or legal fees. While this is a solid argument advocating for cybersecurity solutions, this is far from the only benefit. Having a functioning infrastructure with a cybersecurity-focused mindset also generates a positive outcome for organizations. Let’s look at some of the indirect benefits of cybersecurity spending.
Better compliance alignment
Many compliance regulations, like General Data Protection Regulation (GDPR) and the Health Insurance Portability and Accountability Act (HIPAA), require organizations to implement specific security measures to protect sensitive data. Therefore, investments in cybersecurity help to achieve two goals simultaneously:
The risk profile is contained, and the organization is more resistant to cyberattacks.
The organization ensures that it has all the necessary technologies and policies in place to meet compliance requirements.
Reports confirm that achieving substantial compliance goals require holistic and integrated security solutions, ensuring that every aspect of an organization is covered. For this alone, cybersecurity investments should be at the top of the business manager’s list.
Cybersecurity matters can often be a catalyst for workplace modernization. While this may not always be a seamless transition, the change often allows the work to be performed more efficiently and securely. A good example of this is the remote and hybrid work trend, which became very popular after the global pandemic.
In fact, securing identities and endpoint devices enables users to do their work quickly and securely from anywhere. Nowadays, there are many ways of working, and cybersecurity can be a good contributor to breaking the cycle of outdated tech and enabling all ways of working.
How to apply cost-benefit analysis for your organization
Our rough estimates demonstrate that data breach costs outweigh cybersecurity expenses. While this is a valid statement, this doesn’t provide clear guidelines on what actionable steps should be taken when considering cybersecurity spending. Businesses have finite resources, and cybersecurity is just one area that needs to be addressed. Thankfully, there are some models that we can use as a basis to evaluate cybersecurity costs and benefits.
Let’s start by looking at one of the most widely used schemes: the National Institute of Standards and Technology (NIST) Cybersecurity Framework. This is a helpful document consisting of standards, guidelines, and best practices to manage cybersecurity risks. It’s especially useful because it’s applicable to companies from all industries.
The problem with it is that while it recognizes that management of cybersecurity risks is always organization-specific, which will also shape how the final cost-benefit evaluation will look, it doesn’t outline how the cost-benefit analysis should be provided. For this reason, some researchers suggest integrating mathematical models Lawrence A. Gordon and Martin P. Loeb developed into the NIST Cybersecurity Framework. The model calculates an optimal investment in cybersecurity based on the cost of an attack, the expected probability, and the effectiveness of the security measures put in place.
The basic premise of the Gordon-Loeb model is that there is a tradeoff between the cost of an attack and the cost of investing in cybersecurity. Organizations want to minimize the total cost, including the cost of an attack and the security investment. The model assumes that the cost of an attack is proportional to the value of the information assets that could be compromised.
The model also considers the probability of an attack occurring, which is a function of the number of potential attackers, the likelihood that they will attempt an attack, and the effectiveness of the security measures. The effectiveness of security measures is assumed to be proportional to the level of investment in cybersecurity.
To calculate the optimal investment in cybersecurity, a balance needs to be found between the level of investment and the expected total cost. This relies on the relation between the expected cost of an attack and the cost of the security investment. This leaves us with a four-step approach:
The value of protected information should be estimated as it represents the potential loss (L)
The probability of the information being breached should be estimated (v)
These first two values should be combined to derive the expected loss (vL)
Cybersecurity investments should be allocated to the information based on the productivity and cost of the investments, so an optimal investment level (z)
Putting this data in the graph gives us some perspective on the diminishing returns. If the values of v and L are small, for instance, when v equals 0.1, and L equals $1M, extensive investments in cybersecurity aren’t optimal, as the expenses are higher than the benefits.
However, as the values of v and L increase, the optimal investment amount (z) and the expected loss resulting from a cybersecurity breach (vL) increase in this scenario.
In other words, the more valuable data an organization has, the more it has to lose. Once that threshold is met, not investing in cybersecurity is sitting on a powder keg. It’s a simple exercise to go through to better evaluate your organization’s standing in terms of cybersecurity. As a rule of thumb, the authors of the study suggest that organizations should generally invest less than 37% of the expected loss from a cybersecurity breach. The actual number will then need to be individually calculated based on your organization’s specifics.
How to improve your cybersecurity with NordLayer?
Cybersecurity is unavoidable in the current business environment because cyber threats aren’t going anywhere. This also has associated costs: solutions, services, personnel, and trainings. Organizations aren’t left alone without help, so for those willing to team up with cybersecurity providers — the market offers numerous opportunities that could make your company more resistant to cyber threats.
When it comes to the price, though, there are numerous factors that can also affect cybersecurity costs, like industry and size. As most cyberattacks are financially motivated, the companies with the most sensitive data are the prime targets. Although, it’s always fair to assume that no matter the industry or size, no one is immune to them.
That is why organizations need modern cybersecurity solutions that adapt to changing complexities of today’s working environments. All organizations have information that needs protecting, so all communication channels are interesting to hackers.
With NordLayer’s solutions, organizations can secure access to sensitive information and prevent reputational, legal, and financial damage. No matter what industry, NordLayer can be a reliable ally to help you stay secure. Contact us, and let’s discuss your cybersecurity journey together.