The Rise of Online Commerce and the Risk of Data Breaches
The growth of online commerce has transformed the retail and consumer goods industries over the past two decades. With increasing smartphone adoption worldwide, the share of shopping done online will continue to expand. However, this growth in digital sales comes with a higher risk of data breaches for retailers and consumer goods businesses.
A recent study by IBM Security, the 2023 X-Force Threat Intelligence Index, revealed that the retail and wholesale industry was the fifth-most targeted industry in 2022. Cybercriminals are increasingly exploiting the vast amount of data collected from online transactions. The good news is that businesses can reduce costs and minimize the time it takes to identify and contain breaches by modernizing their cybersecurity strategy with automation and AI technologies.
Understanding the Cost of Vulnerability
It’s no surprise that retail and consumer goods industries are attractive targets for attackers. The projected worldwide e-commerce sales of $8.1 trillion by 2026 means that businesses are accumulating massive amounts of sensitive data, including customer payment information.
Cybercriminals target this wealth of data for financial gain. The IBM Security Cost of a Data Breach Report 2023 reveals that attacks like phishing and compromised credentials accounted for 16% and 15% of data breaches, respectively. These breaches often result in lost or compromised data as cybercriminals find ways to bypass security perimeters.
The Threat Intelligence Index also highlights that breaches against the retail and wholesale industry accounted for 8.7% of all studied attacks among the top ten industries in 2022, an increase from 7.3% in 2021. The manufacturing industry faced even more severe attacks, becoming the most targeted industry overall in 2022. Organizations in these industries experienced record-high costs per breach, with retail averaging $2.96 million and consumer goods reaching $3.8 million.
Opportunities for Improvement
Retail and consumer goods industries have significant room for improvement in defending against data breaches. IBM internal research indicates that only 25% of retail companies and 29% of consumer goods businesses studied utilize extensive automation and AI-powered security solutions. By modernizing security strategies and taking a proactive approach, organizations can enhance their ability to detect intrusions and mitigate real damage, ultimately reducing the overall impact of a breach.
The speed of response played a crucial role in mitigating the impact of data breaches. Businesses that extensively employed AI and automation in their security operations shortened the average breach lifecycle by 108 days, resulting in cost savings of up to $850,000 per attack – 30% less than the average impact. Additionally, businesses that detected breaches themselves were able to act swiftly, reducing the breach lifecycle by nearly 80 days compared to breaches disclosed by the attackers.
As the digitization of retail and consumer goods industries advances, businesses face increasing pressure from attackers seeking to disrupt operations and exploit valuable data. By investing in sophisticated detection and response capabilities, companies can significantly improve their ability to contain data breaches and minimize the financial and reputational fallout.
Explore the Cost of a Data Breach Report
VP and Managing Director of Distribution Industries, IBM