Real Costs of Cybersecurity, A Financial Perspective

Cybersecurity Costs More to Ignore

On the surface it seems counterintuitive to pay for cybersecurity when your company is not managing sensitive data or handling payment information directly. Budgeting for cybersecurity is also not strictly based on meeting compliance standards. Since the true costs are the costs of every minute that the business functionality is impacted due to a breach, it is far better to intelligently prepare defenses ahead of time to avoid operational halts.

A common misconception is that ransomware is the main threat to business operations. While ransomware is extremely detrimental to business functions, the less cared-for bottom line disruption catalyst is an attacker that is able to improperly access company systems at all. According to IBM's Cost of a Data Breach Report 2025, breaches cause disruptions in 86% of cases. Due to the procedures followed once a compromise is identified, the entirety of the company's network comes under suspicion and requires scrutiny. This is not a short process, prepare for weeks not hours. During this time, personnel may be reviewed, systems locked or shut down, networks shut off, staff will work overtime. It is not a painless process with no impact, as even a minimal intrusion can cause a material impact to the immediate financial future of a business.

Below is a non-exhaustive list of potentially included costs of a breach:

• Payment for internal or external incident response team
• Payment for non-working time during investigation
• Replacement of impacted devices, infrastructure, and services
• Notifications to all potentially impacted contacts
• Goodwill from brand reputation/ trust impact
• Lost sales (short and long-term)
• Fees (legal, regulatory, insurance)
• Increased cybersecurity strategy and implementation

What Does the Data Say?

From a financial standpoint, it is not immediately clear which cost will be most impactful during a breach. It is also not a complete science estimating the overall financial impact. What is clear is that companies that foster a security-first mindset and invest ahead of time, see both a measurable reduction in the probability of breaches as well as their bottom line effects.

Historically the data indicates that breaches average in the millions of dollars. Since this depends on the size of companies, it is safe to derive a formula for the cost which scales down to a minimum fixed amount.

How We Estimate the Cost

The challenge is not only to know that breaches are costly but also to budget for them in a way that makes sense year over year. A single breach produces a one-time cost, sometimes in the hundreds of thousands or millions of dollars, but finance teams need a normalized figure that can be compared against recurring expenses like insurance or operating budgets.

To do this we model the annualized expected loss by combining four factors: a fixed floor cost, a variable percentage of sales, an industry multiplier, and the annual probability of a breach.

This is not a forecast of what you will pay in any single year, but a way to express cyber risk in financial terms that can be planned for in advance.

Conclusion

Ignoring cybersecurity is not a method of cost reduction. Failing to account for the real costs will lead to sudden cash flow pressure when a breach occurs. Cybersecurity should be viewed as an investment that yields returns: stronger brand trust that supports sales and marketing, and reduced downside when incidents happen.