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“It’s not surprising that reported security breach incidents and the associated financial impact continue to rise year-over-year,” said David Burg, PwC’s Global and US Advisory Cybersecurity Leader. “However, the actual magnitude of these breaches is much higher when considering the nature of detection and reporting of these incidents.”

As security incidents become more frequent, the associated costs of managing and mitigating breaches are also increasing. Globally, the estimated reported average financial loss from cybersecurity incidents was $2.7 million – a 34 percent increase over 2013. Big losses have been more common this year as organizations reporting financial hits in excess of $20 million nearly doubled.
But despite elevated concerns, the survey found that global information security budgets actually decreased four percent compared with 2013. Security spending as a percentage of IT budget has remained stalled at 4 percent or less for the past five years.

“Strategic security spending demands that businesses identify and invest in cybersecurity practices that are most relevant to today’s advanced attacks,” explained Mark Lobel, PwC Advisory principal focused on information security.

“It’s critical to fund processes that fully integrate predictive, preventive, detective and incident-response capabilities to minimize the impact of these incidents.”

Organizations of all sizes and industries are aware of the serious risks involved with cybersecurity; however, larger companies detect more incidents. Large organizations – with gross annual revenues of $1 billion or more – detected 44 percent more incidents this year. Medium-sized organizations – with revenues of $100 million to $1 billion – witnessed a 64 percent increase in the number of incidents detected. And while risk has become universal, the survey found that financial losses also vary widely by organizational size.

“Large companies have been more likely targets for threat actors since they offer more valuable information, and thus detect more incidents,” said Bob Bragdon, publisher of CSO. “However, as large companies implement more effective security measures, threat actors are increasing their assaults on middle-tier companies. Unfortunately, these organizations may not yet have security practices in place to match the efficiency of large companies.”
Insiders have become the most-cited culprits of cybercrime – but in many cases, they unwittingly compromise data through loss of mobile devices or targeted phishing schemes. Respondents said incidents caused by current employees increased 10 percent, while those attributed to current and former
service providers, consultants and contractors rose 15 percent and 17 percent, respectively. “Many organizations often handle the consequences of insider cybercrime internally instead of involving law enforcement or legal charges. In doing so, they may leave other organizations vulnerable if they hire these employees in the future,” added Bragdon.

Meanwhile, high profile attacks by nation-states, organized crime and competitors are among the least frequent incidents, yet the fastest-growing cyber threats. This year, respondents who reported a cyber-attack by nation-states increased 86 percent – and those incidents are also most likely under-reported. The survey also found a striking 64 percent increase in security incidents attributed to competitors, some of whom may be backed by nation-states.

Effective security awareness requires top-down commitment and communication, a tactic that the survey finds is often lacking across organizations. Only 49 percent of respondents say their organization has a cross-organizational? team that regularly convenes to discuss, coordinate, and communicate information security issues.

PwC notes that it is critical for companies to focus on rapid detection of security intrusions and to have an effective, timely response. Given today’s interconnected business ecosystem, it is just as important to establish policies and processes regarding third parties that interact with the business.

“Cyber risks will never be completely eliminated, and with the rising tide of cybercrime, organizations must remain vigilant and agile in the face of a constantly evolving landscape,” said PwC’s Burg. “Organizations must shift from security that focuses on prevention and controls, to a risk-based approach that prioritizes an organization’s most valuable assets and its most relevant threats. Investing in robust internal security awareness policies and processes will be critical to the ongoing success of any organization.”

To download a copy of the 2015 Global State of Information Security Survey and learn more about PwC’s capabilities, visit: http://pwc.to/GSISS15