[South Africa] Financial Sector surpasses the National Average as Data Breach Costs Reach R73.1 Million

The average data breach cost for South African organizations reached R49.45 million in 2023 – an all-time high according to the IBM Security annual Cost of a Data Breach Report, released recently. This represents an 8% increase over the last 3 years and a 73% increase since South Africa was added to the report 8 years ago.

The per-record average cost of data breaches reached an all-time high at R2 750, a 20% increase from R2 300 in 2021.

Detection and escalation costs reached R20.88 million-the highest portion of breach costs and indicating a shift towards more complex breach investigations. This was followed by costs associated with lost business at R13.56 million, post-breach responses at R13.29 million and notifying relevant stakeholders at R1.72 million.

According to the 2023 IBM report, the financial sector experienced the highest average costs of data breaches, totalling R73.1 million. The industrial and services sectors were second and third, with R71.37 million and R58.78 million, respectively.

The majority of cyber threats were the results of stolen or compromised credentials and phishing scams constituting 14% each as the initial attack vectors. Attacks through compromised business emails were second at 12%, and attacks due to cloud misconfiguration were third at 11%. Globally, the study also found that 95% of studied organizations, including South African organizations, have experienced more than one breach. However, breached organizations were more likely to pass incident costs onto consumers (57%) than to increase security investments (51%).

“South Africa is the financial center and economic gateway to the rest of the continent. This knowledge is not exclusive to the business community; cyber attackers are aware of it too as the financial sector is the most targeted,” said Ria Pinto, General Manager and Technology Leader at IBM South Africa. “Organizations should look to modernize their perimeter security strategies to enhance protection of their financial data by using zero-trust security solutions, underpinned by AI and automation, to increase their cyber resiliency, manage the risks and comply with strict data privacy policies such as the Protection of Personal Information Act (POPIA).”

AI and automation had the biggest impact on speed of breach identification and containment for studied organizations. In South Africa, organizations with extensive use of both AI and automation experienced a data breach lifecycle that was 95 days shorter compared to studied organizations that did not deploy these technologies (190 days versus 285 days), and only 28% of studied organizations have extensively implemented security AI and automation. In fact, studied organizations that deployed security AI and automation extensively saw, on average, nearly R10.49 million lower data breach costs than organizations that did not deploy these technologies – the biggest cost saver identified in the report. And with nearly 29% of studied organizations not yet deploying security AI and automation and 43% using them sparingly, organizations still have a considerable opportunity to boost detection and response speeds.  

“Time is the new currency in cybersecurity, both for the defenders and the attackers. As the report shows, early detection and fast response can significantly reduce the impact of a breach," said Chris McCurdy, General Manager, Worldwide IBM Security Services. “Security teams must focus on where adversaries are the most successful and concentrate their efforts on stopping them before they achieve their goals. Investments in threat detection and response approaches that accelerate defenders' speed and efficiency – such as AI and automation – are crucial to shifting this balance.”

The 2023 Cost of Data Breach Report is based on an in-depth analysis of real-world data breaches experienced by 553 organizations globally (including 21 in South Africa) between March 2022 and March 2023. The research, sponsored and analyzed by IBM Security, was conducted by Ponemon Institute and has been published for 18 consecutive years. 

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