Companies Decrease Cyber Security Spending Despite Rise in Incidents
The number of reported security incidents rose 48% this year to 42.8 million – the equivalent of 117,339 attacks per day, according to The Global State of Information Security® Survey 2015 , released this week by PwC US, in conjunction with CIO and CSO magazines. The survey data also indicates that the compound annual growth rate (CAGR) of detected security incidents has increased 66 percent year over year since 2009.
Most disturbingly, however, is the revelation that companies are actually decreasing spending on cyber security measures at a time when it has never been a greater need for them.
As security incidents grow in frequency, the associated costs of managing and mitigating breaches are also increasing. Globally, the estimated reported average financial loss from cybersecurity incidents was $2.7 million – a 34% increase over 2013. Big losses have been more common this year as organizations reporting financial hits in excess of $20 million rose 92 percent. While risk has become universal, the survey found that financial losses also vary widely by organizational size.
Despite elevated concerns, the survey found that global information security budgets actually decreased 4% when compared with 2013. In fact, security spending as a percentage of IT budget has remained stalled at 4% or less for the past five years. “Strategic security spending demands that businesses identify and invest in cyber security practices that are most relevant to today’s advanced attacks,” explained Mark Lobel, PwC Advisory principal focused on information security. “It’s critical to fund processes that fully integrate predictive, preventive, detective and incident-response capabilities to minimize the impact of these incidents.”
Organizations of all sizes and industries are aware of the serious risks involved with cybersecurity; however, larger companies detect more incidents. Large organizations – with gross annual revenues of $1 billion or more – detected 44% more incidents this year. Comparatively, medium-sized organizations – with revenues of $100m to $1bn – witnessed a 64% increase in the number of incidents detected.
“Large companies have been a more likely target for threat actors since they offer more valuable information, and thus detect more incidents,” said Bob Bragdon, publisher of CSO. “However, as large companies implement more effective security measures, threat actors are increasing their assaults on middle-tier companies. Unfortunately, these organizations may not yet have security practices in place to match the efficiency of large companies.”
Andy Morris, Financial Crime Lead Consultant at ACI Worldwide, noted that smaller companies in particular tend to underestimate the impact cyber attacks could have on their business. “The London of Chamber of Commerce recently published a study which revealed that small businesses in particular are in denial when it comes to cyber threats,” he said. “Many of them are unaware of the dangers and the ‘cyber rhetoric’ and perceived the issue as something too complex and complicated and not relevant to them or their business.”
Insiders have become the most-cited culprits of cybercrime – but in many cases, they unwittingly compromise data through loss of mobile devices or targeted phishing schemes. Respondents said incidents caused by current employees increased 10 percent, while those attributed to current and former service providers, consultants and contractors rose 15 percent and 17 percent, respectively. “Many organizations often handle the consequences of insider cybercrime internally instead of involving law enforcement or legal charges. In doing so, they may leave other organizations vulnerable if they hire these employees in the future,” added Bragdon.
Meanwhile, high profile attacks by nation-states, organized crime and competitors are among the least frequent incidents, yet are among the fastest-growing cyber threats. This year, respondents who reported a compromise by nation-states increased 86% – and these incidents are also most likely under-reported. The survey also found a striking 64% increase in security incidents attributed to competitors, some of whom may be backed by nation-states.
Effective security awareness requires top-down commitment and communication, a tactic that the survey finds is often lacking across organizations. Only 49% of respondents say their organization has a cross-organization team that regularly convenes to discuss, coordinate, and communicate information security issues.
PwC notes that it is critical for companies to focus on rapid detection of security intrusions and having an effective, timely response. Given today’s interconnected business ecosystem, it is just as important to establish policies and processes regarding third parties that interact with the business.
“Cyber risks will never be completely eliminated, and with the rising tide of cybercrime, organizations must remain vigilant and agile in the face of a constantly evolving landscape,” said PwC’s Burg. “Organizations must shift from security that focuses on prevention and controls, to a risk-based approach that prioritizes an organization’s most valuable assets and its most relevant threats. Investing in robust internal security awareness policies and processes will be critical to the ongoing success of any organization.”