The Rise of Cyberattacks:

Why Small Businesses Must Prepare and Protect Themselves

In recent years, there has been a dramatic increase in cyberattacks, with small and medium-sized businesses (SMBs) being a prime target. These attacks often stem from a lack of advanced security measures and the higher vulnerability of smaller businesses to malicious actors. The growing frequency of attacks and their financial repercussions highlight the urgent need for proper preparation.

Key Statistics on Cyberattacks

• Prevalence of Cyberattacks:

Approximately 6% of businesses reported experiencing a cyberattack in the past year. Among businesses using external IT security providers, the exposure rate rises to 18%, compared to only 4% for those not using external providers.

• Highly Vulnerable Businesses:
  Small businesses with 5–20 employees face the highest risk, with an 11% exposure rate, particularly in industrial sectors.
• Financial Losses:
  43% of cyberattacks target small businesses. The average cost of such an attack is approximately $200,000, a potentially devastating sum for a small enterprise.

Why Are Small Businesses a Prime Target?

Many small businesses operate under the misconception that they are not appealing targets for hackers due to their size or the assumption that they lack valuable data. However, hackers often exploit this mindset. Small businesses typically have:

• Weaker Security Measures: Limited budgets and resources lead to inadequate investment in cybersecurity infrastructure.
• Lack of Expertise: Many small businesses lack dedicated IT or cybersecurity staff, making their systems less monitored and more vulnerable.
• High-Value Data: Even small businesses handle sensitive customer or financial information that hackers can exploit or sell.

This combination of factors makes small businesses particularly attractive to cybercriminals, emphasizing the urgent need for proper protection.

How Can Small Businesses Protect Themselves?

While these statistics are concerning, small businesses can implement several fundamental measures to reduce their cyber risks:

1. Install Security Software and Firewalls:
   Antivirus software and firewalls help block malicious software and unauthorized access.
2. Regular Software Updates:
   Keeping operating systems and applications up to date prevents exploitation of security vulnerabilities.
3. Employee Training:
   Educating staff on recognizing phishing attempts and using strong passwords can significantly reduce exposure to cyber threats.
4. Data Backups:
   Regularly backing up critical data and storing it securely allows for quick recovery in case of data loss.
5. Limit Access to Sensitive Information:
   Restricting access to critical data to only those employees who need it minimizes the risk of internal breaches.

The Critical Need for Cyber Insurance

While security measures provide an essential layer of protection, they cannot guarantee immunity from attacks. This is where cyber insurance plays a vital role, offering financial and operational support to businesses in the event of a cyber incident:

• Coverage for Data Recovery Costs:
  Reimbursement for restoring critical data.
• Legal Expense Coverage:
  Support for legal costs arising from customer or partner claims due to a breach.
• Financial Loss Protection:
  Compensation for revenue losses caused by business interruption.
• Incident Management Support:
  Funding for expert services to manage and mitigate the effects of a cyberattack.

Conclusion:

Small and medium-sized businesses are increasingly targeted by cyberattacks, often because they are seen as “soft targets” with minimal protection. Despite this, many SMBs continue to underestimate their risk, leaving themselves vulnerable to costly and damaging incidents.

To protect themselves, small businesses must prioritize cybersecurity by implementing robust protection measures, educating their employees, and securing a comprehensive cyber insurance policy. In a world where cyber threats evolve rapidly, these steps are not just recommended—they are essential.

Investing in cybersecurity and insurance not only safeguards a business’s operations but also ensures its long-term survival in an increasingly digital and threat-prone environment.

Sheli Bremer-Tchaig, Adv.

Head of Insurance