These attacks, compromised of mostly deepfake impersonation and AI-enabled malware, are reshaping breach economics. Attacks are getting faster and cheaper to launch, while breaches keep getting more expensive to find and fix. Companies that reported using AI and automation in security operations cut breach costs by an average of almost $2 million dollars, yet one in four organizations have still not adopted these tools in their security operations.
This growing imbalance-where attacks can be launched for thousands while breaches cost millions-is fundamentally changing the economics of cyber risk.
Frontier AI Threats Driving Earlier Action
Organizations are starting to act on future risk, rather than waiting for an incident. In separate follow-on research conducted by Ponemon Institute, 85% of organizations said they plan to increase security spending after becoming aware of advanced frontier AI cyber capabilities - compared to just 64% that reported in the initial research that they plan to increase security spend after experiencing a breach.
But a gap remains where attackers are moving fastest. While more than 50% reported using agents for threat detection and containment, only 18% apply agents to vulnerability management, leaving known exposures to linger even as AI shortens exploit windows. Three quarters of organizations say frontier AI threats are prompting them to rethink how agents are deployed across their security operations.
"What's changing is the economics of cyberattacks. AI is making attacks faster and cheaper, while breaches keep getting more expensive. When organizations have an extended gap between discovery and remediation, that imbalance shows up directly in breach costs," said Suja Viswesan, VP, IBM Security Software. "The priority now is to eliminate that lag-building remediation into development workflows, securing identity at runtime, and fixing risks at the speed attackers are already moving."
Critical Infrastructure Face Higher AI-Driven Risk
Most AI-driven attacks reported in the study targeted critical infrastructure sectors (62%), with financial services and energy organizations experiencing the highest concentration, raising the risk of broader systemic disruption. Financial services breaches were reported to cost on average $6.3 million, while energy breaches cost on average $5.2 million. The concentration of attacks across these sectors increases the potential for cascading impacts across economies, supply chains, and essential services.
Other Key Findings:
- AI's Weakest Link. More than 20% of organizations reported a breach targeting AI models or applications. The most common causes were weaknesses in surrounding systems: compromised APIs, applications, or plug-ins (27%) and cloud misconfigurations affecting AI workloads (27%).
- Encryption Gaps Persist as Quantum Risk Looms. Core weaknesses in encryption and cryptographic management continue to expose organizations, even as quantum-safe investments grow. Only 37% of breached organizations stated that they encrypt sensitive data both at rest and in transit, and just 34% have visibility into cryptographic assets.
- Ransomware Actors Weaponize Reputation. Reported ransomware incidents rose compared to the year prior (39% vs. 34%), with attackers increasingly using AI to automate and scale. While operational disruption still plays a role, attackers are shifting toward higher-impact pressure-most commonly exploiting brand reputation (41%), followed by employee data (35%) and intellectual property (31%).
The 2026 report, conducted by Ponemon Institute and sponsored and analyzed by IBM, is based on breaches experienced by 602 organizations globally between March 2025 and February 2026. The follow-on study was conducted in May 2026, where 456 organizations of the 602 from the CODB research responded. Of these organizations, 78% or 356 of organizations were aware of recent reports about highly advanced frontier models such as Mythos.
Additional Resources
- Download the full report.
- Register for the webinar.
- Schedule a briefing with IBM experts.
- Understand your AI Cyber Resilience.
About IBM
IBM (NYSE: IBM) is a leading provider of global hybrid cloud and AI, and consulting expertise. We help clients in more than 175 countries capitalize on insights from their data, streamline business processes, reduce costs and gain the competitive edge in their industries. Thousands of governments and corporate entities in critical infrastructure areas such as financial services, telecommunications and healthcare rely on IBM's hybrid cloud platform and Red Hat OpenShift to affect their digital transformations quickly, efficiently and securely. IBM's breakthrough innovations in AI, quantum computing, industry-specific cloud solutions and consulting deliver open and flexible options to our clients. All of this is backed by IBM's long-standing commitment to trust, transparency, responsibility, inclusivity and service. Visit www.ibm.com for more information.
Media Contact
IBM
Michele Brancati
mbrancati@ibm.com
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