Freely subscribe to our NEWSLETTER

While there is no exact formula or “cost of attacks” calculator, there are some useful guidelines and research studies that can provide techniques and resources for IT managers to develop their own cost model. There are three core areas that are important for assessing the impact of network-based attacks and the ”prevention value” of next-generation firewall technologies:

• Defining the different types of network-based attacks
• Understanding how those attacks can affect your bottom line
• Methods of quantifying the impact of those attacks

Types of Network-Based Attacks

There are hundreds of types of network-based attacks that can damage an organization. The most common forms include:
• Viruses, Trojans, worms and other malware that can shut down servers and workstations, or steal data.
• Advanced persistent threats designed to penetrate networks and surreptitiously steal intellectual property and confidential information.
• Distributed denial-of-service (DDoS) and flooding attacks that can overwhelm servers and shut down web sites.

How Network-Based Attacks Can Affect Your Bottom Line

This is where it hurts—attacks cause two major categories of harm, regardless of the source: data breaches and loss of service.
Data breaches are always a topic of sensational news coverage, as they result in confidential information being captured and surreptitiously removed out of the organization into the hands of criminals or competitors.

The damage caused by data breaches is visible and very painful. They can be financial (lost revenue, legal and regulatory costs, lawsuit awards and fines) “soft” costs (loss of customer goodwill and loyalty) and loss of competitiveness (through loss in intellectual property). Companies that have suffered data breaches spend an inordinate amount of time and money in detection and technical remediation costs, identifying and blocking attacks as well as assessing damage and putting corrective measures in place. In addition, the negative publicity over a data breach lasts far beyond the attack itself.

Denial-of-service attacks result in computer systems – workstations as well as web, application or database servers – being degraded or completely disabled. Financial effects include:

The damages in this scenario can also be catastrophic. Commerce slows to a crawl or stops altogether, so revenue is directly impacted. Day-to-day processes are interrupted or employees cannot do their jobs because the network is down. As with data breaches, there’s a real cost associated with IT and support staff having to diagnose problems, coach employees, restart services and re-image PCs.

So, How to Estimate the Costs?

As previously noted, there is no one-size-fits-all cost model.
Two independent sources that can help IT quantify the impact of network-based attacks can be found in a March, 2012 study from Ponemon Institute, and the NetDiligence® Cyber Liability & Data Breach Insurance Claims Study published in October, 2012.
The Ponemon Institute conducted in-depth interviews late in 2011 with 49 U.S. companies in 14 industries that had experienced the loss or theft of customers’ personal data. Some of the key findings:

• The average total cost of a data breach: €4.16 million.
• Lost revenue per breach: €2.28 million
• Post-data breach costs: €1.14 million (everything from help desk, remediation, customer discounts and more)

The per-record figures— which are based on fairly large quantities (typically 100,000+ records)—can give IT managers at least some sense of the cost associated with data breaches, scaled to the size of the enterprise and the number of threats typically faced.

The NetDiligence study analyzed published a study of 137 events between 2009 and 2011 that resulted in insurance companies making payouts on cyber liability claims. Average payouts:
• Legal settlement per event: €1,600,000
• Legal defense per breach €443,045
• Total average insurance payout costs per event: €2.8 million

While these two studies measure different elements of the costs associated with network attacks, they are consistent in one sense—both illustrate just how costly network attacks really are to a company’s bottom line, its reputation and its ability to compete.
Beyond these numbers, there are some back-of-the-envelope calculations that can help justify the investment needed for next-generation network firewall technologies:

• The revenue loss for every hour your web site is down or significantly impaired because of a DDoS attack.
• The productivity loss for every hour a key business process is down because of malware disabling the server.
• The hourly rate for help desk personnel to diagnose malware infections on PCs and for the support group to re-image infected PCs.
• The cost per record for notifying customers or employees in the event of a data breach and providing credit monitoring services to them for a year.

Two additional techniques may be helpful in estimating the costs of attacks. Some organizations have created detailed estimates of possible future ramifications by conducting “war game” simulations. These involve gathering a cross-section of company staff from IT, marketing, HR, legal and other functions, and running through an attack scenario. These exercises not only help quantify costs, but often turn up unexpected effects – for example, contractual obligations or the regulatory impact of data breaches.

Taking Action

How does this all net out for IT managers? The bad news: network attacks are costly, disruptive, potentially catastrophic on many levels and should be avoided at all costs. The good news: there is a rich tool and service set available to help understand exactly how data breaches and loss-of-service attacks can affect your company’s bottom line. By comparing these costs with the preventative costs of next-generation protection technologies you are better armed and prepared to understand and articulate the financial and strategic value of increasing investment in securing your company’s network. This is not an just academic exercise, it is a business imperative.