The Rising Costs of Ransomware Attacks in 2023

Ransomware attacks cripple businesses by encrypting their critical data and systems until a ransom is paid. Unfortunately, the costs of these attacks are skyrocketing. In 2023, the average total cost of a ransomware breach is predicted to exceed $4.5 million. For small businesses, these catastrophic costs highlight the urgent need to guard against ransomware.

By the Numbers: The Rising Price of Ransomware

  • The average ransom payment made in 2021 was $570,000, up 82% from 2020, according to Sophos. The highest reported ransom last year was $40 million.
  • However, ransom payments account for only around 10-15% of total breach costs. The average total cost of a ransomware attack is $4.62 million, according to IBM.
  • Overall costs are rising at an alarming rate. The total cost of ransomware is predicted to jump from $20 billion in 2021 to $265 billion in 2031, an astounding 1,300% increase, according to Cybersecurity Ventures.

Ransomware total costs chart

Chart showing ransomware‘s predicted dramatic cost rise. Source: Cybersecurity Ventures

Why Costs Are Skyrocketing

Ransomware attacks are becoming more frequent, sophisticated and targeted. Several key factors are driving up costs:

  • Higher ransom demands – The average ransom payment has sextupled from $115,000 in 2020 to $570,000 in 2021.
  • Downtime – Recovery now takes over 3 weeks, during which business grinds to a halt, costing upwards of $1 million.
  • Lost opportunities – Missed revenue and new business costs organizations $1.6 million.
  • Remediation – Clean-up efforts require enormous people-hours and outside cybersecurity assistance.
  • Reputational damage – Breaches now cost companies $1.6 million in lost revenue due to damaged customer trust.

Which Sectors Are Hit Hardest?

Some industries face higher ransomware costs due to huge amounts of sensitive data and mission-critical systems.

  • Healthcare – Data breaches cost healthcare over $10 million on average.
  • Finance – A single breach costs financial firms $5.72 million on average.
  • Industrial – Manufacturers face downtime costs of over $1 million per day.
  • Government – State and local government agencies pay an average of $2.28 million per breach.

How Can Small Businesses Survive These Massive Costs?

For small companies, a ransomware attack often spells the end of the business. 60% of small companies fold within 6 months of a breach. The only option is prevention:

  • Train employees on cybersecurity awareness to avoid phishing attacks.
  • Keep software regularly updated and patched.
  • Use strong passwords and enable multi-factor authentication.
  • Backup all critical business data routinely.
  • Install endpoint detection and response (EDR) tools.
  • Work with IT managed service providers to monitor networks and respond to threats.

While ransomware attacks are becoming more common, small businesses can stay resilient by combining employee training with technological safeguards and partnering with experienced IT security professionals. Don‘t let your business add to the ransomware statistics.