The Cost of a Cyberattack to Small and Medium Businesses (SMBs)
Suffering from a cyberattack can be extremely disruptive for any business — but it’s especially damaging for small and medium businesses (SMBs). These businesses — classed as those with less than 250 employees — often lack the resources and technical sophistication to effectively respond to cyberattacks, and as a result, are often the worst affected by security incidents.
Cyberattacks cause all kinds of issues within small businesses. You might lose proprietary customer data, or your employees might be locked out of critical business systems. Or you could fall victim to a ransomware attack, which blocks access to your IT infrastructure until a ransom is paid. New threats are constantly emerging and it’s a near-impossible task for SMBs to track the latest threat intelligence.
Regardless of the type of attack a business suffers, there are almost always negative financial consequences. The cost of a cyberattack varies based on several factors, including the size of the business, the depth of the security breach, and the incident response strategy. And these costs aren’t purely financial: cyberattacks often result in lasting reputational and organizational losses.
How Much Does a Cyberattack Cost Small and Medium Businesses?
Studies from leading analysts in the cybersecurity industry estimate the average cost of a cyberattack on small and medium businesses as anywhere from $25,000 to as much as $3 million. No two cyberattacks cost exactly the same and it’s often challenging to account for exactly how much a cyberattack costs your business.
Many SMB owners are unaware of the risks they face. But every organization is at risk and cybercrime is on the rise. In 2021, 55% of small businesses suffered at least one cyberattack. Despite this alarming statistic, many small businesses are still failing to prioritize their cybersecurity infrastructure — and that leaves them woefully exposed to potential attacks.
Fortunately, it’s possible to take some simple steps to better protect your small business from the costs of a cyberattack. Today, we’ll explore how you can calculate the true cost of a cyberattack on your business. Then, we’ll share measures you can take today to start defending your business against attacks.
How to Calculate the Cost of a Cyberattack
Calculating the cost of a cyberattack on your business isn’t as simple as looking at your bank statements. Cyberattacks can have all kinds of financial implications for a business. These often aren’t entirely reflected in your accounts: costs are also experienced in terms of lost productivity, lost future revenue, or customer churn.
Here are the different types of costs that can stem from a cyberattack:
- Revenue Loss: cyberattacks often result in both immediate and long-term impacts on a business’s revenue. If your network is down due to an attack, it’s likely your business will be unable to function, which can see revenue drop to zero instantly. On top of that, a severe cyberattack might inflict irreparable reputational damage that causes your business to lose out on future deals.
- Productivity Loss: many forms of cyberattack lock employees out of key systems and leave them unable to work. Despite this, your business will still be on the hook for payroll, so not only will you lose ground on the initiatives your employees are working on, you’ll be out of pocket too.
- Ransoms: While it’s generally recommended not to pay a ransom in the event of a ransomware attack, many businesses do pay out of desperation. These ransoms often cost upwards of tens of thousands of dollars and come with no guarantee the issue will be resolved.
- Legal Costs: suffering a cyberattack can expose businesses to all kinds of legal issues, from being fined by regulators to litigation with damaged parties. Depending on the severity of the breach, these costs can easily amount to hundreds of thousands or even millions of dollars.
- Mitigation Costs: all of the above costs come before you’ve even accounted for the expenses associated with identifying the root cause of a breach, addressing the issue, and ensuring it doesn’t happen again. It’s often necessary to bring in a team of cybersecurity consultants at short notice to execute your incident response strategy and restore key business systems.
Given the variety of expenses associated with falling victim to a cyberattack, it’s easy to see how costs can spiral out of control. Instead of running the risk of your business experiencing this nightmare scenario, it’s best to build a robust security infrastructure that ensures your business is in the best position possible to defend against malicious actors.
How to Protect Your Business from a Cyberattack
All businesses — no matter how small — can take steps to protect themselves from a cyberattack. Doing so helps business leaders sleep easier at night, safe in the knowledge their data, systems, and people are well-protected against threats.
Building a robust security infrastructure is no easy undertaking, and for SMBs, outsourcing the vast majority of their cybersecurity infrastructure to a team of trusted experts often represents the best solution. Many small businesses lack the resources to employ a dedicated cybersecurity team internally. The data-driven approach offered by specialized cybersecurity consultants typically delivers better results at significantly lower costs.
There are various ways that small businesses can work with cybersecurity experts to better protect their business from cyberattacks. These include:
- Managed Security Services: working with a Managed Security Services Provider (MSSP) is a great way for small businesses to upgrade their security infrastructure. MSSPs take responsibility for designing, implementing, and maintaining your cybersecurity infrastructure, freeing you to focus on running your business.
- Security Awareness Training: employees are the first line of defense against attacks, but for unprepared businesses, untrained employees almost always represent their greatest cybersecurity vulnerability. Investing in security awareness training that educates employees on how to identify and report common attack types results in huge improvements to the overall cybersecurity posture of an organization.
- Cybersecurity Policy Development: it’s important to have well-defined policies that safeguard business data and minimize your exposure to cyberattacks. Developing a comprehensive set of cybersecurity policies and rolling them out across the organization is an important step in protecting your business. These policies should be updated regularly in response to emerging threats and cybersecurity best practices.
- Vulnerability Assessments: developing an understanding of areas where your business is most vulnerable to cyberattacks enables your business to take steps to improve security in these areas. 60% of cyberattacks occur due to existing vulnerabilities for which a patch was available but not applied. Committing to regular vulnerability assessments enables businesses to identify and address these issues before they’re exploited by attackers.
At Tech Heads, we have a proven track record of working with leading small and medium businesses across the Pacific Northwest to transform IT from a point of weakness into an enduring competitive advantage.
With a deep bench of experts with an array of specialties and a data-centered approach to cybersecurity, partnering with Tech Heads significantly improves your business’s cybersecurity posture, enabling you to more effectively defend your business against cyber attacks.
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