How Much Does Cybersecurity Cost? (and Factors that Affect the Budget)
How much does your business need to allocate for your cybersecurity?
Unfortunately, you can’t predict the exact dollars you need to spend because it will always differ depending on your industry, the type of data your business holds, and many other things.
You can, however, have a ballpark figure by understanding the several factors that can affect the budget. The analogy is simple–the more you stack on these factors, the more you need to invest in your cybersecurity.
At Intelligent Technical Solutions (ITS), we have helped clients in the Chicago, Detroit, Las Vegas, Los Angeles, Phoenix, and San Francisco areas understand their technology and help them make the right cybersecurity decisions for their business. In this article, we’ll go over the following key points:
- Factors that affect your cybersecurity budget
- How to forecast your cybersecurity budget
What are the factors that affect your cybersecurity budget?
Planning your cybersecurity budget isn’t just a one-and-done process. There are a lot of steps and considerations you need to consider to come up with an amount that covers your entire IT infrastructure security. We reached out to Craig Anderson, our Director of Client Success at ITS, to share his expertise on the subject matter.
He enumerated the following factors that will most likely affect your cybersecurity budget:
1. Current IT environment
First and foremost, you must know what you have and don’t when it comes to the latest trends.
How advanced or far behind are you on cybersecurity? The condition of your environment now will help determine what you need to do to get to the baseline.
2. Regulatory compliance requirements
Is your business subject to certain regulatory compliance frameworks, such as HIPAA for healthcare-facing firms and CMMC for government contractors? If yes, you must allot a slightly higher budget following your industry’s guidelines and requirements.
Note that compliance requirements are constantly updated to guarantee businesses remain in line with the changing digital landscape. Therefore, you need to ensure your cybersecurity keeps up with the changes.
3. Cyber insurance
“It doesn’t matter whether you think you are a target of cyber-attacks or not – you are,” says Anderson.
There’s always a way bad guys can make money out of small businesses, even more with big enterprises. So, unless you are a hundred percent certain that your cybersecurity is invincible, you need cyber insurance.
Cyber insurance policies help cover financial losses due to cybersecurity incidents. Your cybersecurity insurance premium will depend on how well you can answer various security questionnaires your insurance provider gives.
4. Type of client or data you keep
Perhaps you are not subject to a regulatory compliance framework, but you have clients who are required to do so. They may hold intellectual property or confidential information that needs maximum protection. And if, for example, you accidentally leak these data because of an unsecured network, this could cause legal problems with clients, which further results in financial and reputational damage.
Such situations create a ripple effect, and it won’t end well. To avoid these events, you need to tighten your cybersecurity not just for yourself but for your clients as well.
5. Response to a cybersecurity incident
There are two possible outcomes to an incident: a liability issue or workflow disruption.
Liability issues may damage your business reputation, especially when it comes to data handling, cost or pricing, or even your position to win bids.
On the other hand, a cybersecurity incident could also result in business downtime. If you have a business interruption, are you unable to close sales? Are you unable to collect money from your client? Are you unable to produce products? How does it affect your cash flow and your revenue?
Anderson stated that if your IT being down has a significant impact on an hourly or daily basis, it will affect how much you will be spending on cybersecurity.
How to forecast your cybersecurity budget
There are a lot of steps that go into forecasting an IT budget, but if you were to hire a Managed IT Service Provider (MSP) to handle the budgeting, the standard process usually starts with alignment audits.
According to Anderson, this is where MSPs review the client’s IT environment and compare it against their best cybersecurity standards and practices. Alignment engineers will then look at the results and fix things within scope. After that, they send it to the client and virtual Chief Information Officer (vCIO) team to make recommendations.
During this procedure, the vCIO will look at the recommendation and identify systems and software that aren’t secure. Then, the vCIO will review the recommendations with the client.
“All those recommendations are going to cost money to implement, so now, it will tie back to all the previously mentioned factors that can affect the cybersecurity budget,” Anderson says.
Some businesses don’t have as many requirements as others; these are businesses that don’t need to submit to regulatory bodies, have data that is not sensitive, or do not run on computers, so operations will continue even though one system is down.
Therefore, when recommendations are made, the vCIO may choose not to push a stronger budget, or they can space it out for a longer time because the risk isn’t as high.
One good example is the difference in budget between a bank and an accounting firm. What might be reasonable for a bank may not be the same for an accounting firm since the firm does not submit to regulatory bodies. Accordingly, a bank’s cybersecurity budget is going to be higher.
Need help planning your cybersecurity budget?
One of the most common questions ITS has received as an MSP is, can businesses do their cybersecurity budgeting independently?
Certainly, yes. But given the length and complexity of the process, it might be challenging to do so. Anderson mentioned that part of why business owners sign up for an MSP is to lift the burden off their backs.
In addition, MSPs like ITS give an unbiased judgment about what cybersecurity solution makes sense and what doesn’t when budget planning. So, you only implement solutions that fit your needs. Otherwise, you could be spending too much money on something you don’t need, or worse, too little to protect your network properly.
If you want a better perspective of your network and help optimize your systems to better align with industry standards, request a free network assessment with us today.