The global private sector is spending more than $100bn on cybersecurity every year, yet sizeable breaches and data losses still occur on a weekly basis. Many business leaders concede that threats are only intensifying, too, with more than four billion records exposed through hacking, malware and phishing in the first half of 2019 alone.
The most significant point here, though, is that these incidents are not only confined to small businesses with inadequate IT protocols. Some of the largest companies in the world are regularly enduring barrages of cyberattacks. Some, such as the attack experienced by retail juggernaut Target in 2013, are well-known, but others have occurred since then; Marriott Hotels, Equifax, Sony, and Adobe are all among the many victims.
But while many of these bigger brands can endure the fallout – if not the prevention – of such a cyberattack, your typical small business is not afforded the same luxury. The effects of an incident can be severe and long-lasting, and can even spell doom for a startup. Therefore, it's vital to understand the importance of cybersecurity as a small business owner.
To further illustrate why, here are just some of the ways that a computer security breach can affect your organisation.
1. Reputational Damage
If shoppers are aware that you have been the successful target of a cyberattack, then, unfortunately, they will likely reach a few conclusions – none of which will be great for your brand's reputation. Customers will feel that:
- You do not take cybersecurity seriously.
- They might be a victim in the next attack.
- You are irresponsible with your customers' personal data.
- Your business could shut down if the next incident is immense.
- You did not do enough to generate security awareness.
Obviously, you do not want to elicit any of these opinions, but this is the extent of the damage that, realistically, you will be facing.
2. Lost Income
A cyberattack can be an expensive ordeal that can be hard to overcome financially.
Indeed, it is estimated that small businesses lose approximately $200k after a successful attack, with other studies suggesting that 23% of companies lost business opportunities, 42% lost new business, and one-quarter of firms lost customers. Ultimately, for many startups and medium-sized enterprises, a cyberattack has long-term ramifications that are difficult to overturn.
As if this wasn't proof enough, a 2018 report by Inc, Cisco, and the National Center for the Middle Market found that 62% of hacking victims in the small and medium-sized business sector went out of business within six months, due mainly to diminished revenues and profits.
3. Extra IT Security Investments
If nothing else, a cyberattack does highlight one thing: your digital security infrastructure is too weak and will require an overhaul if you wish to withstand other ongoing threats, both now and in the future.
As a result, it is now critical to start investing in additional layers of IT security. Whether it is new software on your computers or changes to the hardware on mobile devices, your company will need to spend vast sums of cash on upgrading to be fully protected.
It is also necessary to showcase to your customers that you are taking the problem seriously. For instance, following a data breach in which 76 million households saw details stolen, JP Morgan Chase has done an incredible job in heightening its IT security.
4. Additional Administration Time
Today, small businesses spend around one-fifth of their annual budgets on administration time; if you are victim to a successful cyberattack, this will increase dramatically. Your employees will be forced to instigate a damage control procedure, spending the majority of their time on tasks such as data entry, the notifying of customers, and getting in touch with suppliers, vendors and local authorities.
All of this means that crucial project tasks will be pushed back or ignored, not only setting back your finances and your reputation, but your productivity, too.
5. Notification Expenses
If your company is subject to a data breach, then, depending on where you are located, you may be mandated to notify everyone affected. Moreover, you may also be required to work with victims and inform them closely on what steps you are taking to address the matter.
If your customer base only consists of a handful of people, then notification expenses should not be too bad. However, should your database contain hundreds or thousands of names, then you are looking at a significant portion of your budget – administrative or otherwise.
Failure to do so can be even more expensive, as Uber found out in September 2018. In 2016, a hacker known as "Preacher" gained access to the personal information of 57 million app users and 600,000 drivers. However, the company did not let anybody know this until a year later – and paid the hacker $100k to destroy the data. The company's failure to notify those affected resulted in a series of lawsuits, resulting in an eventual settlement payout of $148m for the ridesharing giant.
6. Privacy Lawsuits
While Uber's lawsuit related to a lack of transparency, security breaches can also attract other legal action. Customers who have had their personal data stolen have a legitimate grievance and could take your company to court, with many corporate brands experiencing class-action lawsuits as a result of a cyber-related incident. For example, FedEx was sued for millions after its European operation was hit with the NotPetya malware virus in June 2017, while Sony agreed to a $15m settlement after its PlayStation Network was compromised,
Unfortunately for you, as a business owner, litigation is expensive. When you are a small operation, a privacy lawsuit – whether from a single individual or hundreds of complainants – can destroy your business, and even potentially affect your personal assets.
7. Lost Corporate Information
Cyber attacks can be so severe that you could witness all of your company's internal information get stolen and lost. This means names, addresses, social insurance numbers, credit cards, tax numbers, contracts and anything else related to your business and your customers. Trying to retrieve this information might be downright impossible if the cybersecurity damage is enormous enough, so you may need to start from scratch, navigate through every possible avenue and contact any other parties you were affiliated with.
As a 2019 study by Forbes recently discovered, nearly half of all organisations have witnessed damage to their reputations and brand value because of a data breach, while another one-fifth of businesses saw their brand affected negatively as a result of a third-party security infiltration. It is the consensus of most experts that once you confirm that your business has been the victim of a cyberattack, it is nearly impossible to remedy in the marketplace.
Consumers value their personal data and privacy, and if they have learned that an unscrupulous individual or outfit stole their information from your company, then it's highly likely that you will lose their trust – and their custom. To avoid this, it is critical to allocate your resources to prevention. This is the only way to survive in an environment where both the public and private sectors are fighting off thousands of attacks every day. You don't need to invest massively to secure basic protection, either; there are many small but effective measures you can take to mitigate many of the most common threats, many of which require no serious technical knowledge. After all, it's your business that will lose out, so every step that you can take is undoubtedly worth it in the long run.
Why else should businesses pay attention to their cybersecurity policies in 2020? Let us know your thoughts in the comment section below.