Cybersecurity Threats Small Businesses Should Watch

By Alex Carter on October 8, 2024

Cyber threats are a growing concern for businesses of all sizes, but small businesses often face greater risk due to limited resources and less robust security systems. As technology becomes more integrated into daily operations, the potential impact of a cyber incident increases. A single breach can interrupt operations, lead to data loss, damage customer relationships, and result in serious financial consequences.

What is Cyber Risk?

Cyber risk is the potential for your company’s digital infrastructure to be targeted, resulting in stolen data, disrupted operations, or extortion attempts. Such events can lead to significant financial damage and erode trust, particularly if customers believe their personal information has been compromised.

Types of Cyber Risks

Cyber threats are not usually caused by outside attackers. Internal dangers may be as harmful, and businesses must be prepared for both deliberate and unintended risks from inside.

Internal Cyber Risks

Internal risks can occur in even the most trusted businesses. These may involve current or former workers who still have access to corporate systems, or they may be the consequence of poor personnel training and awareness.

Here are some common internal cyber risks:

• Employee Sabotage & Data Theft: Current or former staff may steal data or disrupt operations, often for personal gain or to damage the company;
• Unauthorized System Access: Employees may access restricted areas, alter permissions, or disable security, increasing breach risks;
• Negligent Work Practices: Unsecured servers or failing to log out properly can leave systems open to unauthorized access;
• Accidental Data Exposure: Mistakes like sending emails to the wrong person or losing devices can lead to data leaks;
• Personal Device Risks: Connecting unsecured personal devices to the network may introduce malware or create vulnerabilities.

Additionally, working remotely may raise internal risk. Employees who do not have fast access to colleagues or supervisors for second perspectives may be more vulnerable to fraud or phishing efforts that might otherwise be detected in a shared office situation.

External Cyber Risks

Below are the most common types of external cyber risks:

Password Theft

Weak or reused passwords are still common, even among IT staff. Hackers often steal them through phishing or keyloggers that secretly record what users type.

Phishing Attacks

Scammers trick employees into clicking on malicious links or giving up credentials. These scams can also happen by phone, with attackers pretending to be IT support.

Quishing, Smishing & Vishing

Beyond email, phishing now spreads through QR codes (quishing), fake texts (smishing), and deceptive calls (vishing) to capture private information.

Malware Attacks

Malware like viruses and keyloggers can infect systems silently, especially through compromised websites that auto-download malicious files.

Zero-Day Exploits

These attacks take advantage of software bugs before patches are available, leaving systems exposed with no immediate defense.

Poor Patch Management

Delays in applying software updates leave known vulnerabilities open for exploitation, even when fixes are already available.

SQL Injection

By inserting harmful code into website fields, attackers can access or damage critical database information.

Formjacking

Cybercriminals place harmful code into web forms to steal sensitive information, such as credit card numbers, during purchases.

Traffic Interception

Hackers can intercept data flowing through networks to steal login details, financial info, or internal communications.

MitM Attacks

Man-in-the-middle attacks trick users into joining fake networks, allowing hackers to monitor or change their data.

IoT Attacks

Smart gadgets with insufficient security, such as printers or webcams, might serve as entry points for attackers targeting corporate networks.

Malvertising

Fake internet adverts might include hidden spyware or drive people to hazardous websites without their knowledge.

XSS Attacks.

Cross-site scripting occurs when hackers insert harmful scripts into online pages, which then run when other users visit those pages.

Watering Hole Attacks.

Hackers use trustworthy websites visited by a specific group, such as corporate employees, to transmit malware.

DDoS attacks

Distributed Denial-of-Service attacks overwhelm systems with traffic, causing failures or rendering services unreachable.

Cryptojacking

Hackers utilize your system’s resources to mine cryptocurrencies, reducing performance and increasing power consumption.

Ransomware

This virus encrypts files or systems until a ransom is paid, which typically costs more to fix than to pay off.

Trojan Viruses

Trojans pose as safe software but carry hidden threats that can steal data or allow further attacks.

Supply Chain Attacks

By targeting trusted vendors or software upgrades, attackers may infect several firms from a single source.

Who Is Behind Cybercrime?

Individuals and groups with a variety of goals and backgrounds conduct cybercrimes. Former workers are sometimes to blame, seeking retribution after being let go. These insider dangers are frequently avoided by quickly disabling access to systems and accounts when an employee leaves.

In other cases, rivals may be behind the assault, hoping to steal secret information or harm a company’s reputation. There are also activist organizations, known as hacktivists, that target corporations they think are immoral, explaining their attacks as a form of protest or social justice.

Not every threat is intended. Employee negligence may lead to security breaches, especially in firms that lack sufficient cybersecurity training or clear internal standards. However, the majority of offenders are financially driven crooks. These people or organizations want to profit by stealing and selling data on the dark web, conducting ransomware attacks, or diverting payment information to accounts they control. Their purpose is frequently to drain funds rapidly, leaving firms trying to recoup.

Key Cybersecurity Statistics Every Small Business Should Know

Because they lack the resources and security procedures that larger firms have, small businesses remain prime targets for cyberattacks. Recent data shows how susceptible these businesses are to a variety of difficulties.

Nearly 46% of all cyberattacks occur in organizations with less than 1,000 employees. Sixty-one percent of small and medium-sized businesses reported a cyberattack in 2021 alone. Malware was the most common approach employed in these cases, accounting for 18% of all assaults on small firms.

Ransomware is another huge issue. That same year:

• 82% of ransomware attacks targeted companies with fewer than 1,000 employees;
• 37% of the impacted firms had fewer than 100 employees;
• 1 in every 323 emails sent to small businesses was classified as phishing or malware;
• Employees at smaller companies were 350% more likely to fall victim to social engineering scams compared to those at larger firms.

The risk is even greater when considering the type of data small businesses often hold. About 87% store sensitive customer information that could be exposed during a breach. Even more troubling, 27% of small businesses that collect credit card data do so without any form of cybersecurity protection in place, leaving them highly vulnerable to data theft. To better understand how to protect your business from these threats, explore this detailed guide on cybersecurity for small businesses, which covers practical steps and strategies tailored to smaller organizations.

The Real Cost of Cyberattacks for Small Businesses

Cybercriminals often target small businesses because they’re easier to breach and can still bring in significant payouts, especially when attackers hit multiple companies. Many small businesses have weaker security, and these incidents usually get less media or law enforcement attention. That makes the risk of getting caught lower for attackers.

Small businesses also struggle to bounce back after a cyberattack. Only 17% have cyber insurance, therefore, the financial consequences might be severe. In 2020, approximately 700,000 assaults against small firms resulted in $2.8 billion in damages. The expenses extend beyond the assault itself, including:

• Lost clients;
• Legal fees;
• Penalties;
• Cost of replacing systems.

Most cyber incidents at small businesses cost between $826 and $653,587. That’s a big hit for companies that often don’t have emergency funds or insurance. Recovery can be slow too—about half of small businesses say it took 24 hours or more to get back up and running. Downtime means lost revenue and can hurt customer trust. In fact, 55% of consumers say they’d be less likely to work with a business after a breach.

Data loss is another major issue. Around 40% of small businesses report losing crucial data after an attack. If customer information like credit card numbers or personal details are exposed, lawsuits and damage claims can follow.

Ransomware is especially hard to deal with:

• Over half of the affected small businesses end up paying the ransom;
• Some use insurance, but many pay out of pocket;
• A recent survey found that 75% of small businesses wouldn’t survive a ransomware attack due to the disruption it causes.

Despite the risks, most small businesses don’t have cyber insurance. Nearly half of those who bought it only after getting attacked, and many still aren’t sure what it covers. Cyberattacks may be disastrous, and without proper security, recovery can be difficult, costly, or even impossible.

Strengthening Cybersecurity: How Small Businesses Are Responding

Small companies are starting to take cybersecurity more seriously, particularly after being attacked. Many organizations are responding by improving their defenses, changing policies, or hiring cybersecurity experts. As cyber dangers continue to increase, more businesses are investing in prevention to avoid being the next victim.

42% updated their cybersecurity strategies post-COVID

The shift to remote work during the pandemic exposed new vulnerabilities. In response, nearly half of small businesses revised their cybersecurity plans, including stricter password policies and improved access control.

Most small businesses still spend modestly on cybersecurity

Nearly 50% of small businesses allocate less than $1,500 per month to cybersecurity. However, spending is gradually increasing, with more companies investing between $500 and $1,999 monthly compared to pre-pandemic levels.

22% increased their cybersecurity budgets in 2021

While most kept spending flat, over a fifth boosted their budgets. On average, SMBs dedicate 5%–20% of their IT budgets to cybersecurity.

Breaches drive change

After a breach, 29% of businesses hired cybersecurity firms or IT staff. Others took steps like adding antivirus software (44%) and VPNs (43%). Still, 8% made no changes after an incident.

Top cybersecurity tools being adopted

According to a 2022 survey, the most common solutions among SMBs are antivirus software (58%), firewalls (49%), VPNs (44%), and password managers (39%). Many are also implementing secure payment technologies.

Strategies for Minimizing Cyber Risk Exposure

To reduce both the financial and reputational consequences of cyber incidents, businesses must prioritize building a solid cybersecurity framework. Although no strategy can remove every threat, many assaults may be avoided—or at least mitigated—by using proactive security techniques.

Regular updates to computer systems, software, and apps are essential. Delaying these updates leaves openings for malware and exploits. Security software and antivirus programs should also be kept current, and any software that no longer receives updates should be replaced to eliminate potential vulnerabilities.

Data protection should not be limited to incoming threats. Outbound data must also be secured, preferably through encryption, to prevent sensitive information from being leaked by accident or exploited during transmission. Employee training plays a major role as well. Educating staff about phishing schemes, suspicious links, and cyber hygiene helps build a first line of defense against common attacks.

Passwords and access controls should follow these best practices:

• Use complex and unique passwords across different systems;
• Keep administrator credentials separate from server access;
• Enforce secure credential practices with password management tools;
• Encrypt both stored and transmitted data, especially when using cloud-based services.

Limiting login attempts is another useful measure. Companies can prevent automated bots from brute-forcing their way into systems by limiting the number of false password attempts. Dual-factor authentication improves security by forcing users to validate their identity with an extra step—typically a temporary code provided via text or email.

Installing a kill switch allows IT professionals to rapidly disable server access or take websites down if a breach is detected, therefore preventing additional harm. To limit the danger of financial fraud, businesses should avoid retaining consumer credit card data and implement rigorous internal processes to guarantee that this information is never stored.

Routine data backups can significantly shorten recovery time and expenses in the case of an attack. Maintaining a linked asset register also provides an additional layer of control, allowing administrators to monitor and restrict which devices have access to business systems. This is especially useful for managing access when workers or contractors depart the business.

Businesses that provide public Wi-Fi, such as those in the hotel industry, should keep the public network distinct from the one used for internal operations. This reduces the likelihood of illegal access to sensitive data through guest connections.

Legal and Financial Penalties for Cyberattacks

Businesses may also face regulatory fines if they mishandle or disclose customer data. The Federal Trade Commission (FTC), which is responsible for consumer protection, expects firms to preserve client data. If a corporation fails to do so, it may be held accountable and, in severe situations, fined or even prosecuted.

The FTC recommends that businesses review the categories of consumer information they gather, keep just what is required, safeguard that data correctly, and safely dispose of it when no longer needed—via techniques such as shredding or certified data deletion services.

However, FTC action is only one possible consequence. Other penalties can include federal and state fines under the Fair and Accurate Credit Transactions Act, with amounts up to $2,500 per violation federally and up to $11,000 after warnings. Civil penalties may reach $3,500 per violation. Under the Health Insurance Portability and Accountability Act (HIPAA), companies can be fined up to $50,000 for each incident of improper data disclosure, with criminal cases potentially adding prison time.

States also have their own breach notification laws. For instance, Florida can fine businesses up to $500,000 for failing to comply, while Michigan may issue penalties up to $750,000 for repeated violations.

These penalties, coupled with the loss of customer trust, can severely affect a small business—many of which cannot absorb such financial and reputational damage. Taking steps to secure consumer data and securing proper cyber insurance coverage are critical actions to reduce risk in an increasingly connected space.

How Cyber Liability Insurance Can Protect Your Business

Cyberattacks are unpredictable, therefore, cyber liability insurance is a useful safety for firms. This form of insurance provides coverage for a variety of financial losses and associated expenditures that may arise as a result of a cyber event. These might include expenditures associated with company disruptions, ransom payments, forensic investigations, and collaborating with public relations specialists to minimize reputational harm. It can also pay for regulatory fines, the expense of alerting impacted consumers, and credit monitoring services. Legal defense, settlements, and court decisions are frequently included as well.

Aside from reimbursing losses, several cyber insurance companies provide active assistance during and after an attack. Their internal response teams may help to contain malware, halt ongoing breaches, and mitigate the overall harm. This joint response benefits both the insurer and the company by reducing long-term harm and expenses.

Conclusion

Cybersecurity is a necessary focus for any small business that handles digital systems, customer information, or online transactions. Cyber risks come from both internal and external sources and can lead to financial loss, operational disruptions, legal issues, and damage to customer relationships.

To reduce these risks, small businesses must take practical steps such as keeping systems updated, training employees, enforcing access controls, and maintaining regular data backups. In addition, investing in cyber liability insurance and understanding regulatory requirements can help mitigate the financial and legal impact of an attack.