Small Business Cyber Losses

It should be no surprise that cyber-attacks are on the rise. Many small business owners may feel they do not need to worry as cyber losses “only” affect large companies. Though, nearly 60% of small business owners have had data compromised, experienced a security breach, or both. This is according to a survey by The Identity Theft Resource Center (ITRC).

25% of survey respondents reported an incident in the past 12 months. 54% experienced a cyber event during the past two years. These survey findings confirm that small businesses are frequently targeted. Hacker attack methodologies are automated searching any publicly accessible website (and what company does not have a public-facing site?) for a possible entry point.

Not only have more than one of half survey respondents experienced an incident; three-fourths reported more than one cyber event and one-third have had at least three, the center reported.

Cost of Cyber Recovery

Survey results also show the cost of recovering from cyber events: 44% of small businesses spent $250,000-$500,000 to cover the costs, while for 14%, the cost to recover was between $500,000 to $1 million. For many small business owners, having the capital to cover these expenses required 36% of businesses owners to borrow, 34% to raid cash reserves. Less than 30% turned to their cyber insurance to help cover the expenses.

More than 40% of businesses needed one or two years to recover, while over 25% said it took three to five years to recover.

While hackers and external threats launch most incidents, the survey found only 40% of breaches were a result of external actors.

Malicious employees and contractors accounted for 35% of incidents, while remote workers were responsible for 25%. Third-party vendors, failure to secure cloud environments, software flaws, and phishing schemes were also leading causes. The source of 3% of data and security breaches is unknown.

Small business owners should take positive steps to combat the threat of hacking and protect the business from external and internal threats.

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