Financial Crime World

Financial Data Breach Consequences in South Africa Reach Alarming Highs: Report

A recent study by IBM Security has revealed that South Africa is one of the countries with the highest costs associated with data breaches, with the average cost per breach reaching a staggering R49.45 million in 2023.

Rising Costs of Data Breaches

  • The average cost per record of data breaches has reached an all-time high of R2,750, representing a 20% increase from 2021.
  • Detection and escalation costs accounted for the largest portion of breach costs at R20.88 million, indicating a shift towards more complex breach investigations.
  • Lost business costs stood at R13.56 million, while post-breach responses cost R13.29 million and notifying stakeholders cost R1.72 million.

Sectoral Analysis

  • The financial sector bore the brunt of data breaches, with an average cost per breach totalling R73.1 million.
  • The industrial and services sectors followed closely behind, with costs of R71.37 million and R58.78 million respectively.

Causes and Consequences

  • IBM Security’s general manager and technology leader, Ria Pinto, attributed the high cost of data breaches to South Africa’s status as a financial hub and economic gateway to the rest of the continent.
  • 95% of studied organisations, including South African companies, have experienced more than one breach.

Key Factors in Reducing Breach Costs

  • AI and automation emerged as key factors in reducing the speed of breach identification and containment, with organisations that extensively deployed these technologies experiencing a 95-day shorter data breach lifecycle compared to those that did not.
  • Swift response times are crucial in mitigating the impact of breaches. “Time is the new currency in cybersecurity,” said Chris McCurdy, general manager of IBM Security Services.

South Africa’s Vulnerability

  • INTERPOL’s 2022 Africa Cyberthreat Assessment report found that South Africa led the continent in terms of identified cybersecurity threats, with 230 million total threat detections.
  • According to Accenture research, South Africa recorded the third-highest number of cybercrime victims worldwide at a cost of R2.2 billion annually.

Experts’ Warning

  • Experts warn that organisations must invest in threat detection and response approaches that accelerate defenders’ speed and efficiency – such as AI and automation – to stay ahead of increasingly sophisticated cyber threats.