Research aims to calculate the real cost of cybersecurity breaches
A collaborative research initiative aims to illuminate underreported expenses, enhancing risk assessment for businesses.
Last year, the reported average cost of a cybersecurity breach in the United States amounted to nearly $9.5 million with the global average cost per data breach at nearly $4.5 million. But how accurate are these numbers?
Oftentimes, the figures reported in the media are early estimates based upon information supplied by the victim of the cybersecurity breach. However, other factors may play a role in assessing the financial harm cybersecurity breaches might cause.
In 2018, Pamplin College of Business alumnus Alex Nette ’10 joined Michael Cardman ’11 to create Hive Systems, which provides products, services, and training to assist businesses in understanding and protecting themselves against cybersecurity threats. Substantiating the true cost of those cybersecurity breaches can help make the case for businesses that are vulnerable to ransomware and other cyberattacks.
Recently, Nette reached out to Joseph Simpson, collegiate associate professor with Pamplin’s Department of Management, to work together on a sponsored research project that hopes to uncover underreported costs such as reputational damage, downtime, government inquiries, and other associated expenses. With the backing of Hive Systems, the research promises to shed light on crucial aspects of cybersecurity risk assessment and management.
According to Nette, the results of the research can have a far-reaching impact on the industry.
“One of the impacts is that the policies for cybersecurity insurance are based upon these reported figures, but if the figures being reported are too low, then businesses and organizations are at risk of not having enough coverage in the event of a cybersecurity breach, leaving the business at risk of insolvency,” he said.
Nette hopes that the collaboration with Simpson and Pamplin becomes a model and a case study in sponsored research.
“This is a subject matter that would have been very difficult to pursue as a standard academic research topic,” said Simpson. “In this project, I see an opportunity to address a critical need for businesses. Sponsored research projects allow for us to have a societal impact in ways that traditional research sometimes misses.”
Simpson also said the students on his research team – business information technology undergraduates Cynthia Nguyen, Ryan Sylwester, James Sun, Nebiyu Tsige, and Ashley Zou as well as management undergraduate Nakiah Sharp – are helping to collect and analyze mountains of data. According to Simpson, the students’ experience on this project, one with real-world implications, will help to enhance their respective resumes and increase the potential for additional research opportunities in their careers.
Simpson further emphasized the sponsored research’s role in addressing practical needs and societal impact.
“Collaborating with an industry partner helps to bridge gaps between theory and application and also helps to develop a deeper understanding of market needs and practical challenges in research,” said Simpson.
