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In our world today, more and more data breaches are happening, both to big and small companies. It's a big deal because, in the payroll and HR world, a lot of personal and money-related information can get exposed.
One example of this problem happened with UKG, a well-known company in our industry. This shows us that no one is safe from hackers and that we need to work hard to keep our information safe. This event serves as a crucial reminder of the importance of robust cybersecurity measures to protect against potential threats.
Companies need to be ready for these problems. It's important to set up good security to stop hackers and to make sure there’s enough money saved up to handle any attacks that happen. Keeping the company and everyone's information safe should be a top priority.
This article explores the true cost of a data breach—to your company and to your employees.
The 2023 Cost of a Data Breach Report, conducted by the Ponemon Institute and sponsored by IBM Security, analyzed data breaches impacting 553 organizations from March 2022 to March 2023. It provides insights into the causes, effects, and financial implications of data breaches.
The 2023 report reveals that the average cost of a data breach reached an all-time high of $4.45 million in 2023, marking a 2.3% increase from 2022 and a 15.3% increase from 2020. Costs vary greatly depending on the type and size of the attack, the security measures in place prior to the incident, the information breached, the response strategy, and more.
Given the significant cost associated with data breaches, it's imperative to implement robust security measures across your business operations. This is especially true for your payroll and HR systems, as breaches involving employee data not only incur high costs but also lead to unwanted stress for your employees and potential damage to your company's reputation.
The Financial Impact
In 2023, breaches involving employee personal identifiable information (PII)—including names and Social Security numbers—were among the costliest, with organizations facing an average expense of $183 per compromised record. Employee PII breaches constituted 40% of all records breached in 2023, marking an increase from 26% in 2021.
The Impact on Employees
Beyond the impact to your company’s financial health, data breaches impose personal costs on employees as well. They may experience stress and other adverse effects related to data breaches affecting their PII.
Research by Experian Data Breach Resolution and partners reveals how data breaches affect individuals:
- 79% of individuals report stress as a primary consequence of a data breach.
- 39% note the considerable time commitment required to resolve issues stemming from the breach.
- Nearly half of the respondents express long-term concerns over their identity security.
Individuals expect companies to play a role in the response and take action to ease the impact on them. Some of the things expected are:
- 63% want identity theft protection
- 58% ask for credit monitoring
- 67% expect compensation in the form of cash, products, or services
The cost of offering credit monitoring services varies, typically ranging from $10 to $30 per month per individual, depending on the breach's scale and the services offered.
The most recent security breach involving UKG Inc. occurred on October 30, 2023, when a file with confidential employee information was inadvertently shared. This breach involved sensitive details like Social Security numbers and salary information. Following the discovery, UKG initiated an investigation and offered 24 months of free credit monitoring to those impacted.
Data breaches have profound implications on businesses, affecting not only the immediate financial standing but also the long-term health of the organization. Your business must account for these broader impacts when planning a response strategy.
While some consequences directly affect the bottom line, others may have enduring effects on the organization's overall well-being.
- Lost Business Costs: Although seeing a decrease from 2022, lost business costs, including disruptions, lost customers, and reputation damage, still amounted to $1.30 million in 2023.
- Notification Costs: The costs associated with notifying affected parties rose by 19.4%, from $310,000 in 2022 to $370,000 in 2023. This includes emails, letters, outbound calls, or general notices to those affected, regulators, or outside experts.
The duration and financial consequences of a security breach significantly depend on the level of data regulation in their industry. Businesses in highly regulated sectors see 58% of the costs stemming from a data breach accruing after the first year, while businesses subject to fewer data regulations typically resolve approximately 64% of the costs within the first year.
Strategic Considerations for Future Security
Businesses should evaluate not only the security measures currently in place but also the response strategy they intend to implement in the event of a breach. Key strategies can significantly influence the overall cost of a data breach:
- Incident Response Planning: Organizations with high levels of incident response planning and testing save an average of $1.49 million compared to those less prepared.
- Breach Lifecycle: Breaches resolved in under 200 days cost 23% less than those taking longer.
- Involvement of Law Enforcement in Ransomware Attacks: Excluding law enforcement results in 9.6% higher costs and a 33-day longer breach lifecycle.
Utilizing security AI and automation technologies can reduce the financial impact of breaches, with organizations experiencing breaches 108 days shorter and $1.76 million cheaper than those without such technologies.
Greenshades ensures a fortified digital environment for seamless workforce management. Our platform undergoes regular SOC1 and SOC2 evaluations, prioritizing data security and confidentiality. With comprehensive vulnerability assessments and penetration tests, we reinforce its robustness against threats. We also offer:
- Additional login security with multifactor authentication
- Azure Active Directory and Azure Authentication login options
- IP address whitelisting to allow only trusted access
- Vigilant security oversight with logged login attempts
- Security personnel support for investigating suspicious activities
- Lockout and expiration rules to prevent unauthorized access
Ready to Enhance Your Payroll & HR Data Security?
Don't wait for a breach to happen. Protect your business and your employees with Greenshades' comprehensive security solutions. Our team is ready to help you implement robust security measures, ensuring your data stays safe and your mind stays at ease.
Contact us today to learn more about our security offerings and how we can help safeguard your organization against the unforeseen.
