A recent CNBC article on the high risk that cybercrimes pose to small businesses was eye-opening in many ways. According to it, cybercrime complaints against small businesses exhibited a 7% year-over-year increase, with overall losses compounding to $6.9 billion.
Another story describes how Kronos, a workforce management business, was the target of a ransomware attack that crippled its digital timekeeping function in December 2021 – leading to employee and company woes during the holiday season.
If organizations of this size can face challenges in responding to threats despite taking all necessary security precautions, one can only imagine the problems awaiting small businesses that aren’t necessarily equipped with the resources to establish a robust cybersecurity framework.
At the end of the day, small businesses must be aware of these cyber risks and how to guard against them. To that end, let’s decode the cyber risks and learn how small businesses can avoid them.
Cyber Threats Small Businesses in the US Face
Phishing Attacks
The most frequent cybercrimes that small businesses and even individuals encounter on a daily basis are phishing attacks. In these attacks, the perpetrator frequently poses as a known person to attract attention and persuade the target to take action. These actions may result in the affected person downloading malicious software, which may cause operational problems and the loss of data.
An average employee receives over 14 malicious emails annually, and email is one of the most popular platforms for phishing scams. The majority of phishing emails have a virus attachment, but an interesting statistic indicates that more than 76% of these emails have no attachment at all.
Ransomware
Ransomware is a big cyber threat that small businesses in the US must contend with. This type of attack focuses on encrypting a company’s files and sending menacing messages to demand a ransom to unlock the files. According to a recent study, over 80% of ransomware attacks only target small businesses because they are relatively vulnerable.
According to Datto’s report, which details the types of ransomware malware businesses have encountered in the past, more than 61% of respondents have experienced virus infection, followed by adware infection (54%), spyware infection (46%), and remote access trojan infection (more than 26%). The same report also notes that 15% of respondents report multiple ransomware attacks in a single day, making it a severe cybercrime to address and be concerned about.
Weak Protection
Small businesses are frequently unaware of these cybercrimes and are more likely to overlook this aspect of security when it comes to their operational requirements. The majority of these businesses do not prioritize safeguarding their data using sophisticated technologies and secure passwords. This can reportedly result in an average loss of over $383,365.
In an interview with CNBC, FBI Supervisory Special Agent Michael Sohn emphasized the use of multi-factor or two-party authentication. Unfavorably, these basic precautions are frequently disregarded, resulting in data leaks and breaches and further leading to significant losses and other problems.
Effect of Being a Victim of Cyber Threat
Service Disruption
Disruption of business services is one of the main outcomes of cyberattacks. Attacks that cause a denial of service or bring in ransomware can halt all business operations and result in substantial financial losses.
Bad Brand Name
Attacks like these harm the company’s reputation by generating negative publicity and dwindling stakeholder trust.
Data Leakage
Another, more severe impact of such attacks is data leakage. Data leakage due to cyber threats can be a serious issue if the data is sensitive and contains compliance information.
Financial Damage
If the data includes price quotes or other similar information that could undermine the small business’s competitive advantage in the market, such data leakages could cause irreparable financial harm.
How To Stay Protected?
Now the question is how to lessen the impact of such attacks while still staying protected from them.
Insurance is one way to protect yourself from these attacks; small businesses can purchase cyber insurance that includes liability and data breach coverage. These insurance policies are perfect for small businesses that are running without sophisticated cybersecurity systems. Cyber insurance can be included in business insurance plans. It can help with tasks like paying for the damage to stakeholders or customers, hiring an attorney, etc. Additional add-ons like extortion coverage and business loss coverage can also be added for better and more effective protection.
The premium that a small business must pay to stay protected from these cybercrimes varies depending on the kind of data the company stores, its revenue, the strength of its clientele, other risk factors, etc. When choosing the best cyber insurance coverage for securing the company against cyber threats, the right service provider can give help with an accurate business evaluation.
Businesses in this technologically advanced world desperately need cyber insurance that protects them from the aforementioned financial and reputational harm. Gonzalez Insurance conducts a thorough portfolio analysis before putting forth personalized quotes and suggesting add-ons.
Get in touch with us to learn more about the actual cyber insurance needs of your business.