Many small business owners may think that they’re “too small” a business for cybercriminals to care about and that only the big fish are susceptible to cyberattacks. This common misconception lands a staggeringly large number of businesses in hot water. It leaves them unaware and unprepared for threats that lurk around them. According to Accenture’s recent report, small businesses are the targets of 43% of all cyberattacks yearly, and 46% of cyberattacks hit small businesses with less than 1000 employees. What’s even more alarming is that only 14% of these surveyed businesses were equipped to face such an attack.

Small businesses are easy targets for cybercriminals with a dramatic spike in cyberattacks last year. This trend shows no signs of slowing down as small businesses continue to shift their ops to the cloud and adopt more technologies, making them even more vulnerable to attacks. Not having the right measures in place can cost these businesses anywhere from $800 to $653,587. A steady 15% spike in cybercrime costs is projected over the next 5 years, reaching 10.5 trillion by 2025.

Small businesses are a big part of the economy and play an important role in local communities as well as global economies. When small businesses go through cyberattacks, it has a trickle-down effect leading to disrupted services, financial loss, and shattered trust. While there are solutions and recovery plans for most cyberattacks, customer data theft can have dire consequences which can affect the company’s reputation, its customers, and the broader community as well.

What makes small businesses such easy targets?

Almost half of all reported cybercrimes are against small businesses, and while data breaches at huge corporations will generally make front-page news, these cyberattacks do not get that kind of attention.  Larger corporations also have the resources to put sophisticated solutions in place to combat a breach, unlike small businesses. Exactly what makes them so vulnerable. Just like any other business, small businesses as well handle large volumes of sensitive data daily, this can include financial and personally identifiable information. When this data is compromised by cyber criminals, it can lead to identity theft, data loss, and privacy breaches. It is important to understand the risks so that small business owners are more prepared to deal with the ripple effects of cyberattacks.  Many SMBs also made the shift to digitization in recent years, often without the security infrastructure or internal cyber expertise that such processes dictate. This has also been one of the reasons why they make such easy targets.

Tactics that are used to target small businesses

Phishing, ransomware, and malware are among the most common tactics deployed by cybercriminals to breach small business systems. These are typically low-investment tactics that are scalable, which is why attacks can even go unnoticed sometimes. The consequences can be devastating, and businesses can suffer data loss, financial fraud as well as operational disruptions as a result of these tactics. Here are some of the threats that every small business owner must be aware of:

1. Phishing and Malware: Phishing attacks use email or social media platforms to trick employees into releasing sensitive information like passwords. Malware such as viruses and trojans can infiltrate systems via downloads or links which can compromise an entire corporate network.

2. Ransomware: Ransomware encrypts a business’s data and blackmails SMBs for huge ransoms for the data to be released.

3. Disgruntled employees: Mention that acts of cyber espionage are common with employees using their data access to breach company data or IT operations.

4. Human error: This is also known as an unintentional insider threat where someone can accidentally compromise the company by allowing hackers to gain control by accessing company portals or networks.

5. Distributed denial of service (DDoS): Every time a web server that hosts your website gets a request from another computer, it is programmed to respond, hackers take advantage of this by sending out millions of fake requests to a victim’s server.

6. Botnets: These are automated tools that can conduct attacks and consist of bots that can infiltrate any system and steal information or provide hackers with access by breaking in.

Security vulnerabilities in small businesses

We don’t want to be alarmists, but it is important to explore some of the blind spots that cybercriminals will exploit if overlooked. Addressing these gaps can help safeguard a business to a certain extent. Here are some of the key vulnerabilities:

1. Weak passwords and password reuse: Poor password practices are still very much a thing and are in fact, one of the most common vulnerabilities. Without strict enforcement policies for passwords, employees can get away with simple, guessable passwords or reuse passwords across multiple accounts or touchpoints. All this makes it a cakewalk for cybercriminals to access company data.

2. Habitual software updates and patches: Software developers often release updates to fix bugs and vulnerabilities, and when companies do not promptly apply these updates, they may be inviting hackers to gain access to their systems.

3. Lack of training and awareness: SMBs often overlook cyber training and feel as if it is not worth the investment, which can be a costly mistake. Proper training is important so that employees understand the risks and repercussions, so they can practice better practices when it comes to keeping their data and information secure.

Steps that small business owners can take to lower the risks of cybercrime

For business owners, here are a few effective risk mitigation practices that can go a long way:

Strong password policies: Enforcing two-factor authentication can make it much harder for criminals to break into the system.

Securing networks with firewalls: Firewalls and encryption both work together to safeguard digital assets. Firewalls create a physical barrier between trusted internal and untrusted external networks, thereby controlling and monitoring traffic and blocking unauthorized access.

Data backups & disaster recovery plan: Regular backups and a proper recovery plan should be in place so that in the worst-case scenario, organizations can quickly recover and bounce back.

Getting cyber insurance: It is now mandated for many small business owners to have cyber insurance and for a good reason. At Gonzalez Insurance, our policies can provide financial protection against cyberattacks and can be a savior in the eyes of an attack. According to IMB’s report, Cost of a Data Breach, 83% of businesses have had more than one data breach, with the average breach costing up to $4.35 million. Cyber insurance can drastically reduce the financial impact making it a prime risk management tool for businesses. Here is what’s covered:

1. Business interruptions: Losses incurred during halts in operations are covered.

2. Threat response and remediation: System repairs, forensic investigations, and any other incident response are covered.

3. Legal expenses: Legal fees against lawsuits raised by customers are also covered.

4. Data breach recovery: When hackers steal personally identifiable information, cyber policies can cover the costs of notifying customers.

5. Regulatory action: The cost of compliance and audits will be covered.

6. Reputation management: A comprehensive policy will also cover fees for SMBs to hire a PR firm in case the company name is tarnished.

7. Ransom payments: Ransom payments in light of a ransomware attack can sometimes be covered.

Any losses caused by insider threats or state-sponsored attacks in acts of war will not be covered. From one small business owner to another, it makes sense to have cyber insurance as it can be a lifeboat in case of a cyberattack. If you’re looking for a good policy that is custom-designed for your needs, get in touch.