Does Your Small Business Need Cyber Security?
Small businesses are incredibly vulnerable to cyber attacks that can cause significant financial damages and leave them open to lawsuits from those impacted by the attack. By implementing a small business cyber security plan, you can protect your business against cyber threats and avoid losing sensitive data.
While many small businesses do not prioritize cyber security, a recent report by Verizon found small businesses are the target of 43% of cyber attacks. As small businesses often don’t have the IT infrastructure to protect against these attacks, the results can be devastating.
To help you protect your business against data breaches, here’s what you need to know about why your small business needs cyber security.
What is Cyber Security?
Cyber security is the practice of protecting your company’s critical IT systems and sensitive information against digital attacks and data breaches.
When a small business experiences a data breach, the damages can often be enough to put the company out of business. According to IBM, the average cost of a data breach in 2021 was $4.24 million. This includes the costs required to respond to the breach, lost revenue, reputational damage, and other expenses. Small businesses may also be susceptible to lawsuits following data breaches, which can result in further financial damages.
Beyond the immediate damages caused by a data breach, the long-term impacts can be devastating for small businesses. Since cyber criminals often steal consumer information, including names, passwords, email addresses, addresses, social security numbers, etc., to sell to other cyber criminals, a data breach may cause your consumers to lose trust in your business.
To reduce the risk of experiencing data breaches and minimize their long-term impact, it’s important for small businesses to create and implement a comprehensive cyber security strategy and carry cyber insurance.
Why Are Small Businesses Vulnerable to Cyber Attacks?
All businesses are vulnerable to cyber security attacks, but small businesses, in particular, are often more likely to fall victim to these attacks for a variety of reasons.
First, small businesses often can not afford a dedicated IT staff to monitor and protect their systems. Even those that have in-house IT staff cannot provide adequate training or budgets to maintain their IT infrastructure effectively. If your business cannot support a dedicated in-house IT staff, it may be worth hiring a managed IT services provider to care for your systems.
Small businesses also often neglect to implement a comprehensive cyber security plan as they don’t see themselves as likely victims of cyber attacks. As a result, when they do experience a data breach, their response times are very slow, resulting in more significant financial damages.
Small businesses also need to ensure their employees are aware of phishing and social engineering scams that cyber criminals use to steal information from small businesses. In many cases, data breaches result from employees accidentally giving away sensitive information rather than hackers breaking into your systems.
Lastly, many small businesses don’t use cloud services to back up their sensitive data. When they experience a data breach, they are unable to recover their lost data, which creates a long-term impact for the company.
What Cyber Security Threats Do Small Businesses Face?
Small businesses face a variety of common cyber security threats, including:
- Malware: Malware refers to any malicious software designed to damage your computer or provide someone with unauthorized access to your systems. While antivirus software helps protect against malware, modern malware attacks can pass by antivirus software undetected.
- Phishing and social engineering: Cyber criminals often try to steal information from businesses and employees by posing as legitimate businesses and sending emails or messages asking for sensitive information, including credit card data or login information.
- Ransomware: Ransomware is a specific type of malware that locks down your files, sensitive data, and computer systems and threatens to delete your information or release private information to the public if you do not pay a ransom.
- Man-in-the-middle attacks: These attacks rely on cyber criminals eavesdropping on communications between two parties to intercept sensitive information. For example, a hacker can intercept data being transmitted over an unsecured WiFi network.
- Server attacks: Server attacks, like denial of service (DOS) attacks, are used to overload a company’s servers so they can’t handle the volume of service requests.
These are some of the most common cyber security threats small businesses face, and without cyber insurance and a comprehensive cyber security plan, these types of attacks can result in significant financial damages, lawsuits, and other consequences.
Cyber Security Tips for Small Businesses
To protect your business against cyber attacks, it’s important to be proactive and take steps to minimize your risk.
Follow these tips to improve your company’s cyber security practices:
- Assess your risk: Small businesses should start by hiring a consultant to assess their risk and vulnerabilities. You should work with this consultant to test systems that have external access and create procedures to follow if these systems are involved in a breach.
- Train employees: To prevent cyber attacks, it’s important to train your employees and ensure they are aware of the different cyber threats that small businesses face, including malware and social engineering, in particular. You should establish Internet usage guidelines, ensure they are using unique passwords, and establish rules and procedures for handling sensitive data.
- Keep clean machines: Small businesses can keep individual computers clean and free from viruses by using modern security software, ensuring their antivirus software is up-to-date, and regularly scanning their computers for malware.
- Back up data: Small businesses should use cloud services to back up their sensitive data. This will help ensure you can recover important information if your business is the target of a cyber attack.
- Hire a managed IT services provider: For small businesses, hiring a dedicated IT staff may be out of the question. Third-party managed IT services providers offer affordable cyber security and IT services to small businesses that don’t have the resources to maintain their systems themselves.
- Incorporate mobile device security: Mobile devices create unique challenges when it comes to cyber security. To ensure your employees are risking your company’s data when using their mobile devices, encourage them to password-protect their devices, encrypt their data, and use security software to protect their data when on public networks.
- Limit access to data: Employees should only be given access to the systems and data they need to perform their jobs. The more people that have access to sensitive data, the more likely it is for that data to be compromised.
- Change passwords: All employee passwords should be unique, and you should require employees to change their passwords every three months to ensure they are less likely to be compromised.
- Use two-factor authentication: Many modern apps and software allow users to set up two-factor authentication to prevent unauthorized access. Small businesses should require their employees to set up two-factor authentication when using work-related apps.
- Cyber insurance: While cyber insurance won’t defend your business against cyber attacks, it will help you recover from them and minimize your financial damages. Cyber liability insurance is essential for any small business that handles sensitive information.
There are a number of steps small businesses can take to improve their cyber security practices and reduce their risk of suffering damages due to a data breach.
What is Cyber Insurance?
Cyber liability insurance can help businesses cover the expenses that result from a data breach or cyber attack. This can include the costs required to recover lost data, notify affected parties, and defend themselves against lawsuits filed by their clients and customers.
As cyber attacks can result in hundreds of thousands of dollars or even millions of dollars in damages, it’s crucial small businesses carry cyber insurance to ensure they don’t have to cover these expenses themselves if cyber criminals target them.
What Does Cyber Liability Insurance Cover?
Cyber insurance typically includes first-party and third-party coverage — both of which help businesses mitigate the damages that may result after a data breach. For more on what does cyber insurance not cover you can check out our blog here.
Cyber insurance can help you cover expenses related to:
- Data recovery and restoration
- Lost revenue due to downtime or business interruption
- Notifying impacted parties
- Crisis management, including hiring an attorney or forensic accountant
Depending on your specific policy, cyber insurance may or may not also cover losses related to social engineering and phishing. Cyber insurance also does not cover intentional and dishonest acts, criminal activity, or data loss due to utility failure.
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Cyber security is essential for small businesses as cyber attacks and data breaches can result in significant financial losses, a loss of consumer trust, and damage to your company’s reputation.
At KSA Insurance, we work with small businesses in South Carolina and across the southeastern United States to help them find comprehensive cyber insurance policies that mitigate the damages caused by data breaches
Contact us today to request a quote and learn more about small business cyber security and cyber insurance.