Cost-Benefit Analysis of Investing in a Stronger IT Security Solution

In health, experts often use the popular adage, “an ounce of prevention is worth a pound of cure.” In other words, it’s easier to work hard to avoid a health problem than to fix one. And like someone going to a doctor only after their health is suffering, too often CPA firms seek out cybersecurity only after a serious breach or problem. By taking preventive action, CPA firms can potentially save millions of dollars in the long term. Understandably, some firms worry about the upfront costs of creating a strong culture of cybersecurity. To help clarify the cost and benefits of stronger cybersecurity, we looked to IBM, one of the world’s leaders in computer products and services. IBM recently released their annual “Cost of a Data Breach Report.” IBM found that 2021 was the most expensive year for data breaches in the 17-year history of their report. We used their stats and our proven experience working with CPA firms to do a cost-benefit analysis of investing in a stronger IT security solution. Read on to learn how you can better protect your CPA firm from disastrous data breaches.  

What Are the Costs of Investing in a Stronger IT Solution?

Analyzing costs, even non-monetary ones, are a key part of any effective cost-benefit analysis. It’s important to attempt to put a dollar figure on all costs, even if estimated, for comparison’s sake. When investing in a stronger IT solution, the biggest costs are initial and monthly expenses along with the cost of culture change. All costs of building a stronger IT solution should be compared to the cost of a data breach. IBM found that the average size of a data breach is 25,575 records, each record costs the company $150 on average, and the total cost to a company averages over $3.8 million. 

1. Initial and monthly expenses:  This cost is the easiest to estimate directly. For CPA firms that choose to upgrade their IT solution on their own, the initial start-up costs will be greater due to purchases of hardware, software, space, and potentially expert consultants. What’s more there are the expenses to maintain the system and pay employees. However, the number of CPA firms managing their own networks keeps dropping. Most CPA firms are choosing to instead invest in a cloud-based IT solution like Cetrom’s. IBM’s report found that automation and artificial intelligence provided the best cost mitigation, up to $3.8 million, for data breaches. Any strong IT solution should use multiple artificial-intelligence-based security projects. Reach out to Cetrom to get an estimate on the cost of investing in a stronger IT solution for your specific firm. 
2. Culture change: Investing in a stronger IT solution isn’t just about getting the best technology and hiring experts. It’s also about creating a culture of cybersecurity. According to IBM’s report, the most common cause of data breaches was compromised credentials - a sign that security isn’t a key part of an organization’s culture. Changing culture requires employee training, revising policies, testing the training, and making security the default choice for all users. Culture change is a proven way to boost IT security. 

What Are the Benefits of Investing in a Stronger IT Solution?

One of the key findings in IBM’s report was that it’s critical to invest in aggressive prevention and recovery strategies. According to IBM’s report, the important benefits of investing in a stronger IT solution are as follows. 

1. Avoiding a data breach: As said above, IBM found that the average cost of a data breach is now approaching $4 million. CPA firms with valuable financial data are also prime targets. What’s more, a data breach might expose a firm to expensive lawsuits and the associated legal fees and settlement costs. The benefits of avoiding a data breach are tremendous and can’t be ignored. 
2. Allocating resources elsewhere: CPA firms are great at what they do. And when they can outsource and invest in a stronger IT solution, they can keep focused on what they do best. An overlooked benefit of investing in a stronger IT solution is freeing up energy and resources to devote elsewhere. 
3. Safely working remotely: In today’s world, remote work has serious benefits for employees and firms alike. However, IBM found that the cost of data breaches with remote work was over $1 million more than those where remote work wasn’t a factor. Working outside the office creates additional risk that many companies aren’t prepared for. What’s more, organizations who used cloud-based security contained their data breaches 77 days faster than those in earlier stages of cloud migration. A stronger IT solution, particularly a cloud-based solution ideal for protecting remote work, can enable your CPA firm to safely work out of the office. 

How Can Insurance Help Mitigate Risk?

Even with premier security and IT experts in charge, there is still a place for cybersecurity insurance. CPA firms should always carry cybersecurity insurance. Look closely at your insurance plan to confirm that your coverage includes the following. 

1. First-party vs. Third-party insurance coverage: this clause determines what level the data breach occurred. First-party insurance helps respond to data breaches on your own network (i.e., a direct attack on your system). While third-party insurance protects a firm against data breaches by one of their contractors, freelancers, or another periphery organization. In the case of a data breach, there might be lawsuits, and these insurances generally cover legal fees and settlement costs. 
2. Ransomware insurance: Another key insurance is for ransomware. In the event of a ransomware attack, you’ll want to know that your insurance will both negotiate with the attacker and pay the ransom.

It’s important not to assume that just because you have cybersecurity insurance that you’re completely protected. Validate what’s covered and ask your insurance company about specific situations and how they would be handled. Regardless of the level of your IT security, good cybersecurity insurance helps alleviate major risk. Cybersecurity insurance is ideally not something you want to use, but for firms with weaker IT security systems, they may find themselves putting in an insurance claim sooner than later. 

What’s the Bottom Line?

IBM’s “Cost of a Data Breach Report” makes clear that data breaches today are more costly than ever. We encourage all CPA firms to do their own cost-benefit analysis, but we believe investing in a stronger IT solution will be beneficial for any firm seeking to avoid a data breach. At Cetrom, we offer an all-in-one IT hosting solution for CPA firms, and it’s 100% cloud based. Our cloud-based system combined with around-the-clock support and enterprise-level security is exactly what IBM recommends, reducing the chances and impact of a data breach. CPA firms who focus on investing in a strong IT solution, along with a solid insurance plan, can be confident that they’ve taken all the necessary steps to prevent a data breach. If you have questions about how to conduct a cost-benefit analysis for investing in a stronger IT solution, or what the exact costs are, contact Cetrom today.