How Much Should a Business Spend on Cyber Security?

Cyber security is no longer a discretionary line item—it’s a core operational cost for modern businesses. As digital systems, cloud platforms and AI-driven tools become more embedded in daily operations, the question is no longer whether to invest in cyber security, but how much is enough.

The challenge for many organisations is finding the right balance between protection, practicality and budget. Overspending can feel wasteful, while underspending can expose a business to significant financial, legal and reputational damage. Understanding what drives cyber security costs (and how to allocate them effectively) is key.

Why Cyber Security Spend is a Business Decision, Not Just an IT One

Cyber threats impact far more than servers and software. A single breach can disrupt operations, compromise customer trust, trigger regulatory penalties and stall growth plans. Ransomware attacks, data leaks and system outages often affect revenue and reputation long after the technical issue has been resolved.

As businesses increasingly rely on data-driven decision-making, cloud platforms and automation, security investment must keep pace. This is where strategies like unifying AI and data posture become increasingly relevant—ensuring that emerging technologies and sensitive data are protected under a cohesive, organisation-wide security framework rather than siloed solutions.

Is There a Benchmark for Cyber Security Spending?

While there’s no one-size-fits-all number, many Australian and global benchmarks suggest businesses typically spend:

5-10% of their overall IT budget on cyber security
Or 2-0.9% of total annual revenue, depending on industry risk

These figures provide a starting point, but they shouldn’t be followed blindly. A professional services firm handling sensitive client data will have very different risk exposure compared to a small retail operation with limited digital infrastructure.

Here are the Key Factors That Influence Cyber Security Budgeting

Business Size and Complexity: Larger organisations with multiple systems, locations and users naturally require greater investment. More endpoints, more data and more integrations mean a larger attack surface.
Industry and Regulatory Requirements: Sectors such as finance, healthcare, education and government are subject to stricter compliance obligations. Meeting standards around data protection and reporting often increases security costs—but also reduces long-term risk.
Data Sensitivity: The more valuable or sensitive the data you hold, the higher the potential impact of a breach. Customer records, financial data and intellectual property all require stronger controls.
Threat Landscape: Cyber threats evolve constantly. Businesses operating in high-profile or highly targeted industries may need to invest more in monitoring, threat intelligence and rapid response capabilities.

What Should a Cyber Security Budget Actually Cover?

A well-structured cyber security budget isn’t spent in one place; it’s spread across prevention, detection and response.

Common investment areas include:

Risk assessments and security audits
Endpoint protection and network security
Cloud and data security controls
Identity and access management
Employee cyber awareness training
Incident response planning and testing

Importantly, security spend should scale as the business grows. Cyber security isn’t a “set and forget” investment—it’s an ongoing process that evolves alongside technology and risk.

The Cost of Underspending on Cyber Security

Attempting to save money by cutting corners can be far more expensive in the long run. According to industry data, the average cost of a data breach runs into millions once downtime, remediation, legal advice and reputational recovery are factored in. For small to mid-sized businesses, even a single serious incident can be enough to cause long-term financial strain or permanent closure. In this context, cyber security spend should be viewed as risk mitigation rather than overhead.

Spending Smarter, Not Just Spending More

Effective cyber security isn’t about buying every available tool—it’s about aligning spend with risk. Businesses that take a strategic approach often prioritise:

Clear visibility of where data lives and how it’s used
Consistent policies across systems, users and platforms
Integration between AI, data management and security controls

This approach helps avoid duplicated tools, security gaps and unnecessary complexity while improving overall resilience.

So, How Much Should Your Business Spend?

The right answer depends on your business’s size, industry, data exposure and growth plans. As a general rule, if cyber security spending feels like an afterthought—or hasn’t been reviewed in years—it’s probably insufficient. A proactive review of your current posture, combined with a risk-based budgeting approach, can help ensure your investment is both cost-effective and future-ready.

What’s the overall takeaway?

Cyber security spending should be proportional, strategic and aligned with business objectives. Rather than asking “What’s the cheapest way to stay secure?”, a better question is “What level of risk is acceptable for our business?”. With cyber threats continuing to evolve alongside AI and digital transformation, thoughtful investment today can prevent costly consequences tomorrow.