IT & Security Cyber Insurance Information Technology

The Urgency of Cybersecurity and Cyber Insurance for SMBs

Paul Freeman

Part 2 of 5: 

Small and medium-sized businesses (SMBs) face a growing threat from cybercriminals who see them as easy targets due to perceived weaker security measures and the valuable data they possess. Contrary to the misconception that SMBs are too small to be targeted, statistics show that they are increasingly victims of attacks, with ransomware being a particularly prevalent threat. Cyberattacks can cripple SMBs, leading to substantial financial losses from system repairs, data recovery, business interruption, and potential lawsuits. Without cyber insurance, many SMBs would struggle to recover from these incidents, risking closure within just six months. Therefore, investing in robust cybersecurity measures, along with obtaining comprehensive cyber insurance coverage, is paramount for SMBs to protect their assets, reputation, and long-term survival.

  • A significant percentage of cyber breaches impact businesses with under 1,000 employees. 46% of all cyber breaches impacted these businesses in 2021, according to Verizon's 2021 Data Breach Investigations Report.
  • This number has been steadily increasing, highlighting the growing vulnerability of SMBs.
  • Hackers often find smaller businesses to be more attractive targets because they typically have weaker security protections in place, making them easier to breach. Additionally, receiving smaller amounts of money from multiple smaller businesses can easily add up to the amount that could be obtained from a single large enterprise.
  • Media and law enforcement scrutiny tends to be less intense for attacks on smaller businesses, further increasing their appeal to hackers.

Types of Cyberattacks Affecting SMBs

  • Malware is a common cyberattack method against small businesses, accounting for 18% of attacks.
  • However, social engineering attacks, especially phishing, are even more prevalent. Small businesses experience 350% more social engineering attacks than larger companies.
  • Ransomware attacks are also a considerable threat, with 82% of these attacks in 2021 targeting businesses with under 1,000 employees.
  • Businesses with fewer than 100 employees accounted for 37% of companies hit by ransomware.

Impact of Cyberattacks on SMBs

  • Cyberattacks can have a devastating impact on small businesses. The cost of cybersecurity incidents for SMBs typically ranges from $826 to $653,587.
  • Nearly 40% of small businesses lose crucial data due to attacks.
  • Half of SMBs need 24 hours or more to recover from an attack.
  • Website downtime, a frequent consequence of cyberattacks, can severely affect business operations and customer relationships. Following an attack, 51% of small businesses reported website downtime ranging from 8 to 24 hours.
  • A cyberattack can damage a company's reputation and deter customers. 55% of U.S. consumers indicated they would be less likely to do business with a company that has experienced a data breach.

Cybersecurity Preparedness Among SMBs

  • Despite the growing risks, many small businesses remain unprepared for cyberattacks.
  • 47% of businesses with fewer than 50 employees have no dedicated cybersecurity budget.
  • This figure highlights a concerning trend: cybersecurity spending often increases with company size, suggesting that smaller businesses may not be prioritizing cybersecurity as much as larger ones.
  • Alarmingly, 51% of small businesses have no cybersecurity measures in place.
  • This lack of preparedness is partly attributed to the misconception that small businesses are not targets for cyberattacks. 59% of small business owners without cybersecurity measures believe their businesses are too small to be attacked.
  • Only 17% of small businesses encrypt their data, leaving sensitive information vulnerable.
  • Similarly, just 20% have implemented multi-factor authentication, despite its effectiveness in preventing unauthorized access.

Cybersecurity Tools and Strategies for SMBs

  • While 42% of small businesses have revised their cybersecurity plans since the COVID-19 pandemic, more needs to be done.
  • Despite increased awareness, nearly half of small businesses spend less than $1,500 per month on cybersecurity.
  • Antivirus software, firewalls, VPNs, and password management are among the top cybersecurity tools that SMBs are adopting.
  • Third-party cyber coverage can protect businesses from liability if a third party brings claims against them. It typically covers:
    • Payments to consumers affected by a breach
    • Claims and settlement expenses
    • Losses from defamation and copyright infringement
    • Costs for litigation and regulatory inquiries
    • Accounting costs
  • To enhance their security posture, SMBs can implement strategies such as:
    • Conducting thorough security assessments to identify vulnerabilities.
    • Providing employee training to raise awareness and educate about best practices.
    • Using VPNs to protect remote workers.
    • Employing robust antivirus software and keeping it updated.
    • Implementing strong network security measures to restrict unauthorized access.
    • Enforcing the use of strong, random passwords.
    • Adopting multi-factor authentication for enhanced security.
    • Implementing a regular data backup strategy.
    • Employing next-generation firewalls for advanced threat protection.

Not Optional Anymore

Cyber insurance is no longer optional for businesses in today's increasingly interconnected world. It's essential for mitigating the potentially catastrophic financial and reputational consequences of cyberattacks. By understanding the benefits and coverage options of cyber insurance, you can make informed decisions to protect your business and ensure its long-term success.

How Can We Help?

Navigating the complexities of cybersecurity and cyber insurance can be daunting for any SMB. PulseOne can help your business alleviate these challenges. With our expertise in managed IT services and cybersecurity, including assessing security risks, recommending appropriate tools and controls, and augmenting your internal IT resources, we can help you establish robust security practices, potentially reducing your cyber insurance premiums and strengthening your overall security posture. PulseOne offers peace of mind regarding compliance with various standards, such as SOC 2, HIPAA, and GDPR. Let PulseOne become your partner in achieving a secure and prosperous future for your business. Contact us today to learn more about how we can help.