Cybersecurity attacks are one of the biggest security risks to an organization. The impact of security breaches on businesses is enormous and ever-increasing. These events also hurt the business through the loss of data, brand image, or reputation. Attacks on a company can spread quickly which can impact employees and customers at the same time.
Particularly vulnerable to these attacks are small businesses. They often have less robust defenses in place, and some provide VPN connectivity to their corporate clients which ramps up the number of potentially impacted businesses and people with additional network connections outside of the company. Those threats can have a variety of consequences, including these five:
1. Loss of Customers
When a business has security incidents directly related to poor information security policy and process, you can immediately lose the goodwill of that relationship. Even if the security incident doesn’t impact some or all customers, many begin to feel anxious and think it’s a matter of when and not if another will happen. That can add up to a lot of lost customers that stay away for a very long time. While a cyberattack may only last a few minutes, the impact of it can last for many years afterward.
2. Risk of IP Loss
A corporate network may contain stored data that is considered intellectual property or industry secrets of that business. Things like blueprints or designs get targeted for exfiltration during a cyberattack. Manufacturers can lose product or tooling designs before obtaining patents, and application developers have sensitive code exposed. When these sensitive documents get released over the internet, competitors can learn a company’s secrets. Competitors can start using the methods discovered from leaked data or target customers and learn a company’s next moves undetected, which can have a huge impact on any competitive advantage. The bottom line, the risk of losing IP is high when a company is dealing with a cyberattack.
3. It Costs a Lot of Money and Time to Remediate
The average cost of a data breach in 2020 was nearly $4 million. Companies of any size can at minimum expect to spend a few hundred thousand dollars because of a network breach. These costs can significantly reduce a company’s ability to continue to grow and reinvest in the business as SMBs can see a rush of other indirect costs because of the cyber security incident. These can include:
- Service credits or other refunds issues to impacted customers.
- Lawsuits from customers and/or partners.
- Fines from regulatory agencies.
- Higher insurance premiums.
Lost productivity from IT staff that are now dealing with the fallout from an incident rather than working on business-growth activities.
Restoring lost data can be a slow process that can impact a company’s ability to continue to conduct business as usual.
4. Brand Reputation Damage
The adage that all press is good press doesn’t apply here. When businesses publicly disclose a data breach, it has the potential to be highly publicized depending on the size and scope of the breach. In 2019, there was a data breach every month that garnered media attention in some form. Whether that was industry-specific publications or the national media, people remember those names years later. Even if a breach doesn’t rise to that level, customers will look to the breached company for guidance on solutions and direct communication related to the containment and potential data exposure of the incident. How a company responds here is key to its long-term prospects of maintaining a good image publicly.
5. Business Closure
SMBs are always a target for cyberattacks and are likely the least equipped to be able to handle them properly. If a company can’t access data on customers or other software, it may not be able to stay open until the incident is remediated. That can take time if there are poor data management practices and policies (backup, BC/DR plans), have a small IT staff that can’t handle a potentially complex cybersecurity attack, or something else completely. This can all lead to a small business being forced to make the worst possible decision (permanent closure) if they can’t recover from the incident in a reasonable amount of time afterward.