A common debate in boardrooms today is whether a business’s cybersecurity investment truly pays off. On one hand, cybersecurity can be seen as a necessary expense that doesn’t directly generate revenue. On the other hand, underfunding security can lead to catastrophic losses in the event of a breach. The truth is, the cost of a data breach almost always outweighs the cost of prevention and threat mitigation. Let’s break the figures down.
The rising cost of data breaches
According to the Cost of a Data Breach Report 2025 study by IBM, a data breach costs a business $4.88 million on average, marking a steady increase annually. This figure includes expenses such as system restoration, legal fees, customer notification, lost business, and reputational damage.
But that’s only the direct cost. The hidden toll — like lost customer trust or delayed projects — can take years to recover from. Small and midsize businesses (SMBs) often don’t survive a data breach because they don’t have the financial resources to bounce back from damage.
In comparison, spending on cybersecurity — covering managed IT services, endpoint protection, and regular compliance checks — requires a fraction of that cost if the funds are allocated strategically.
Why do businesses underinvest in cybersecurity?
Despite the mounting risks, many organizations continue to address cybersecurity reactively, acting only after an incident has occured. The hesitation to spend on proactive cyber defense usually stems from three misconceptions:
- “We’re too small to be targeted.” Cybercriminals target any vulnerable systems they can find, and SMBs are often easier targets because they don’t have robust defenses against cyberattacks.
- “We already have antivirus.” Sophisticated threats such as ransomware and phishing mimic human behavior, making them difficult for regular antivirus software and basic security to identify.
- “We can’t afford advanced protection.” Advanced protection is becoming more affordable as more security providers offer packages that fit SMBs’ budgets.
Breaking down the numbers
The table below compares the cost of a proactive cybersecurity strategy with the potential expenses you may face after a breach.
| Category | Preventive cybersecurity costs | Breach recovery costs |
| Security tools and managed IT | $50,000 to $150,000 annually | — |
| Incident response and recovery | — | $250,000 to $1,000,000 annually |
| Legal and regulatory fines | — | $500,000+ |
| Customer churn and reputational loss | — | Potentially millions of dollars over time |
Even conservative estimates show that investing in prevention yields a much higher return over time. In financial terms, it’s the difference between an affordable cost and a major financial burden.
A CFO’s perspective: Cybersecurity as a value driver, not as a cost center
Convincing leadership to prioritize cybersecurity spending can be difficult. Chief financial officers (CFOs) naturally want to protect profit margins, but without adequate security, those profits will still disappear because of breaches.
Every minute of downtime, every leaked record, and every lost client translates directly into revenue loss. When viewed through that lens, it’s clear that cybersecurity is as much about managing risk as it is about protecting data.
In fact, according to the same IBM study above, organizations that invest in mature security frameworks spend 30% less on breach recovery and downtime compared to those with limited controls. That’s a compelling case for turning cybersecurity from a reactive cost into a proactive investment strategy.
Where should you start with cybersecurity?
Building a strong security budget means spending smartly. Here are a few ways to get your smart security spending started:
- Conduct a risk assessment: Identify your most valuable assets and the threats most likely to target them.
- Prioritize high-impact protections: Focus on policies and tools that directly reduce risk, such as zero trust architecture or continuous monitoring to make the most out of your dollar.
- Leverage managed IT services: Outsourcing security management can lead to better protection without increasing costs.
- Plan for compliance: Following frameworks such as GDPR, HIPAA, and SOC 2 help you avoid fines and lower your risk of cyberattacks. This helps protect both your reputation and your bottom line.
When these elements work together, your cybersecurity budget becomes less of a cost and more of a long-term business advantage.
The truth your CFO needs to hear
If your leadership team still sees cybersecurity as an expense instead of an investment, our white paper Cybersecurity Budget vs. Breach Costs: The truth your CFO needs to hear is for you. It breaks down real-world breach data, ROI models, and budgeting frameworks to help decision-makers understand the financial stakes of inaction.
Download your free copy today and learn how Nero Consulting helps businesses balance security, compliance, and financial responsibility, so you can protect your operations before it’s too late.
Partner with Nero Consulting to build a cybersecurity strategy that aligns protection with performance. Whether you need managed IT services or data compliance solutions, we’ll help you invest wisely, stay secure, and keep your business moving forward.