The True Cost of Insider Threats: Uncovering Hidden Dangers and Avoiding Expensive Consequences for Businesses

In recent years, the risk posed by insider threats has emerged as a critical issue for businesses. These threats arise when employees or associates within a company misuse their access to harm data integrity, systems, or confidential information. With the rapid advancement of technology and increasing reliance on digital solutions, the financial repercussions of insider threats have intensified. This article delves into the various forms of insider threats, the escalating costs they incur, and the profound effect they have on organizations.

Types of Insider Threats

Insider threats manifest in diverse ways, each requiring distinct strategies for effective mitigation. Key types include:

  1. Malicious Insiders: These are individuals who intentionally inflict damage on their organizations, often driven by personal motives or a desire for retaliation.
  2. Negligent Insiders: This group includes employees who, often unwittingly, endanger organizational security through actions like clicking on phishing links or mishandling confidential information.
  3. Compromised Insiders: These are employees whose personal credentials or devices have been hijacked by external attackers, thereby granting these attackers unauthorized access.

The Costs of Insider Threats

In 2023, businesses are facing an unprecedented surge in the costs associated with insider threats, as highlighted in Ponemon’s “Cost of Insider Risks” study. The report reveals that these expenses have soared to a remarkable $16.22 million annually, a 5% increase from last year. This significant financial strain stems from both the investigation of incidents and the implementation of preventive strategies.

Breaking down the costs, organizations are spending around 18.6% of their insider threat budget, which translates to $3.03 million, on investigating internal incidents. Furthermore, around 10.1% of this budget, or $1.64 million, is being invested in proactive measures to thwart potential insider threats. This data underscores the growing importance of efficient risk management strategies in today’s corporate landscape.

Analyzing the Cost of a Single Insider Threat Incident

In order to grasp the full impact of insider threat incidents on an organization, it’s crucial to analyze the expenses incurred per incident, not just the annual aggregate costs. The Ponemon study reveals that a single insider threat incident can cost an average of $628,700. Here’s a breakdown of these costs:

  • Investigation Costs: Approximately $117,500 is allocated for investigating the incident. This covers expenses involved in pinpointing the breach’s origin and evaluating the extent of the damage.

  • Proactive Security Measures: Organizations spend about $63,400 on proactive security strategies to avert future similar incidents.

Moreover, it typically takes an organization about 86 days to fully resolve an insider threat incident. This duration underscores the significant time and resources needed to effectively manage and rectify these security breaches.

Underinvestment in Insider Risk Management

In the realm of cybersecurity, the financial commitment to combating insider threats is alarmingly inadequate. The enormity of the issue, with a staggering cost of $16.2 million, is met with a mere 8.2% of the total IT security budget of many organizations. This figure boils down to a scant $200 per employee allocated for insider risk management programs and policies.

To better understand the scale of this underfunding, let’s examine a hypothetical company with 2,500 employees:

  1. Investigation Costs: With a yearly budget of just $93,000, the company spends only about $37.20 per employee on investigating insider threats.
  2. Proactive Measures: Even more concerning, a mere $50,500 is set aside annually for proactive security measures, equating to just $20.20 per employee.


This financial strategy is grossly insufficient. It restricts companies to only addressing the most basic security concerns and bars them from exploring new, innovative solutions in the market that could significantly strengthen their security posture. The gap between the funds allocated and the actual requirements for robust insider threat management is a critical issue in the IT security domain, one that demands immediate attention and action.


The financial impact of insider threats on organizations is escalating, necessitating increased investment in effective countermeasures. As these threats become more complex, it’s imperative for companies to dedicate sufficient resources towards insider risk management. Ignoring this vital element of cybersecurity can result in substantial financial losses and damage to a company’s reputation. To fortify their defense against these internal risks, organizations are advised to enhance their investment in risk management programs, comprehensive employee training, and proactive security strategies. This approach is crucial for organizations aiming to protect their data and assets from the intensifying challenge posed by insider threats.

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