Cyberattack? That only ever happens to others!

Small businesses often fall into the illusion of security, believing their data is of little interest to hackers. Cyberattacks? Data theft? Those are only for the "big fish," right? Wrong!

High risk – low awareness

According to a study by McAfee, almost half of all small businesses have already experienced a hacking attack. Among the affected businesses, 17% were hit more than once. For 67% of these cases, the attack occurred within the last two years.

Germany’s Federal Office for Information Security (BSI) also highlights that small and medium-sized enterprises (SMEs) are increasingly becoming victims of cyberattacks. Sensitive data is stolen, manipulated, or deleted, customer data is compromised or published. Unlike large companies, SMEs are typically not targeted by direct attacks but rather fall victim to large-scale, automated attacks.

The potential for such incidents to threaten a small business's survival is clear. The days of hoping to remain untouched are definitively over. And here’s something every business leader should know: the responsibility for cybersecurity lies squarely with the management!

Why cybersecurity is often neglected

The reasons many small businesses have done little to protect their data are varied and, to some extent, understandable. The top three reasons include:

1. Limited resources
   Both financial and human resources are often stretched thin. When already facing numerous challenges, investing in data security can feel like an added burden. Many businesses prioritise immediate operational needs over preventive measures. Moreover, most small businesses lack dedicated IT departments, leaving cybersecurity to be handled by existing staff.

2. Lack of awareness
   Small business owners are often insufficiently informed about the dangers of data breaches and the benefits of a robust security strategy, leading to a poor assessment of their own risk. Researching and addressing cybersecurity issues can also become a drain on resources.

3. Underestimating the consequences
   The potential consequences of a data breach are frequently underestimated. Many believe their data isn't attractive enough for hackers or that a security incident is unlikely. However, studies clearly show otherwise.

What are the risks?

A cyberattack can quickly lead to financial losses. McAfee’s global study indicates that 61% of small businesses reported damages exceeding $10,000. Beyond quantifiable losses, there are longer-term and more far-reaching consequences:

Loss of trust and reputation

Small businesses thrive on customer satisfaction and word-of-mouth recommendations. A data breach compromising customer data can deeply shake trust in the business. This is especially true for sensitive client information, such as that handled by notaries or accountants, but applies to any business storing valuable customer data. A loss of such data can ruin a hard-earned reputation in no time, resulting in fewer repeat orders and no further recommendations. The financial impact is difficult to quantify.

Financial losses and liability risks

Data breaches can have significant financial repercussions. Small businesses often lack the resources to recover from the fallout of a data protection violation. Legal consequences, such as fines or compensation claims, can endanger the survival of a business. Not to mention, in cases of customer data theft, ransom demands can arise. While the BSI advises against paying, many companies, out of desperation, make payments in hopes of regaining access to their data.

Downtime and productivity losses

Cyberattacks, malware, or data loss often lead to significant downtime. Small businesses without IT resources are especially vulnerable to such disruptions. Production halts, delivery deadlines are missed, and new orders cannot be processed. Every day counts until “business as usual” can resume, which may take even longer if hardware needs replacing or entire IT infrastructures must be rebuilt.

Corporate espionage and competitive disadvantages

Small businesses are not only attractive to customers but also to competitors. Poor data security makes it easy for attackers to steal sensitive information. Corporate espionage can lead to considerable competitive disadvantages if confidential business secrets fall into the wrong hands.

Regulatory compliance and cenalties

Lastly, data protection regulations are becoming increasingly strict worldwide. Companies must ensure they meet required standards. Small businesses that ignore these regulations risk heavy fines or even losing their operating licences. Additionally, executives can be held personally liable for GDPR violations.

Conclusion

These are risks no business should take. Thankfully, there are ways to protect yourself when exchanging data of any size - whether via email, file transfers through secure data rooms, or workflows that ensure compliance with laws like the Supply Chain Act. And all of it certified, made, and hosted in Germany.