Worried About a Cyberattack? What It Could Cost Your Small Business

How cyberattacks impact small businesses

Small businesses that ignore cybersecurity do so at their own peril. In fact, 43% of data breaches involve small business victims. Additionally, Verizon’s 2022 Data Breach Investigations Report says that very small businesses are extremely vulnerable to malware, ransomware, brute-force attacks, and social attacks – and may not survive one incident. 

Even so, many businesses fail to use data security software and other security measures. This lack of preparation increases a small business’s vulnerability to cyberattacks.

Here’s a look at what can happen if a cyberattack hits a small business. 

1. Cyberattacks cost small businesses money.

According to a report by IBM and the Ponemon Institute, the average data breach cost for businesses with fewer than 500 employees is $2.98 million, and the average cost per breached record is $164. While a small business’s costs will vary according to the incident and its damages, you’re unlikely to emerge financially unscathed. 

When a cyberattack hits, businesses are responsible for direct costs, including:

• Handling immediate damages and repairs
• Paying the ransom costs of a ransomware attack
• Providing free credit monitoring
• Staffing customer service personnel to handle calls 
• Offering free or discounted products and services
• Paying fines

You may also need to incur the costs of hiring: 

• IT security consultants
• Risk-management consultants
• Lawyers
• Physical security consultants
• Auditors and accountants
• Management consultants
• Public relations consultants 

Additionally, cyberattacks can create legal, civil and regulatory liabilities that leave a business’s operations and future mired in uncertainty. All of these costs and more can drag down a business’s value. 

2. Cyberattacks have indirect costs on business operations. 

In addition to direct costs, cyberattacks have indirect costs related to unexpected downtime, loss of productivity and decreased morale. As the business owner or IT manager struggles to get the incident under control and assess the damages, they’re unable to pursue business growth and handle their other responsibilities. Operations can grind to a halt, particularly if you depend on web-based applications that may be compromised. 

All this negativity and workplace stress can affect team members’ morale, especially if lax security practices contributed to the attack. 

3. Cyberattacks prompt many businesses to increase prices. 

Cyberattack costs are often passed down to consumers, who end up subsidizing the organization’s lack of preparation. According to IBM, 60% of breached businesses raise prices after a cybercrime incident to help cover the expenses related to it. 

Some customers may push back on higher prices, turning to competitors with more reasonable offerings and additional security. 

4. Cyberattacks can hurt a business’s reputation.

Cyberattacks can severely damage a business’s reputation. Consumers may be understandably wary of frequenting businesses that have been hit by attacks. Similarly, investors may view being a cyberattack victim as a form of carelessness and may not want to involve themselves. A tarnished reputation may also scare away qualified job applicants who don’t want to associate themselves with a poorly regarded business.

How to prevent and mitigate cyberattacks

The good news is that there are often relatively easy and inexpensive ways businesses can prevent cyberattacks and take steps to reduce their damage. Here are some ways to improve your business’s cybersecurity:

• Make cybersecurity an ongoing process. The best way to reduce the damage of a cyberattack is to prepare for one. This may include measures such as having a comprehensive cybersecurity plan that engages experts as necessary. It’s also smart to keep software updated with the latest security patches, use robust antivirus software and secure devices from hackers. 
• Educate employees about the risk of cyberattacks. Your employees can be your toughest or weakest line of defense. Hackers and cybercriminals often penetrate systems by tricking your employees into giving them the keys. It’s crucial to continually train employees on cyberattack risks and the importance of staying vigilant. Consider training sessions to show employees how to spot infected computers and suspicious emails and websites, and guide them on creating strong passwords and using two-factor authentication.

What to do if you get attacked

Even taking smart precautions may not be enough to prevent a cyberattack. Here’s how to minimize the damage if cybercriminals target your company.  

• Activate your cybersecurity response plan. Companies that have taken steps to prepare for a cyberattack should have a planned response in place. This should include activating employees across the organization to take steps to reduce the damage. Ideally, team members will understand their roles, including technical tasks like determining the attack’s source and type, securing compromised data, and evaluating the damage. Companies should also report the attack to local, state and federal authorities.
• Protect your business. Cyberattacks demand a multipronged response. Beyond the technological toll of these attacks, businesses must maintain operations despite software disruption; assuage customers, investors and the public; protect their technical and physical infrastructure; and recover whatever’s been lost. The myriad cross-department tasks involved demonstrates the importance of having a response plan in place before it’s needed. 

Small businesses must be ready for cyberattacks

For many small businesses, a cyberattack may seem unlikely and abstract, so they ignore the risk. That is a massive mistake. Cyberattacks are unfortunately common among small businesses and can have devastating consequences. It’s critical to have a plan.