How Data Breaches Are Reshaping Small to Medium-Sized Organizations

Hi!?? Welcome to Advanced Access. This week, in honor of Cybersecurity Month, we discuss the importance of data breach protection for small—and medium-sized businesses. Discover the common types of data breaches, the major impacts they can have, and ways you can safeguard your business.

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A data breach is a security event that results in unauthorized access to confidential information—a disastrous event for an organization of any size. From financial losses to a tarnished reputation to potential litigation, the consequences of a data breach can be highly damaging to a business, especially small to mid-sized businesses (SMBs) with limited resources and budgets. While organizations of all sizes can fall victim to a data breach, SMBs tend to be seen as more vulnerable than large-scale companies, making them a prime target for cybercriminals.

In 2023, 3,122 publicly reported data breaches affected 349 million people and cost an average of $4.45 million. While 2023 marked a record high, 2024 is already trending to surpass those statistics. Data breaches are not going away, making it essential for SMBs to stay proactive and prepared. Continue reading to learn how to protect your SMB—from assessing your security measures to developing a response plan.

Why SMBs Are Vulnerable to Data Breaches

SMBs face significant challenges due to having fewer resources compared to larger enterprises. Their limited budgets and lack of specialized IT expertise often result in weaker security measures, such as outdated software and minimal security protocols. Inadequate training on security practices, such as phishing attacks, malware, and weak passwords, increases the risk of human error, making SMBs vulnerable. Additionally, many SMBs underestimate the risk of cyber threats, believing their smaller size makes them less likely to be targeted. In reality, it’s the opposite. Verizon’s 2022 Data Breach Investigations Report revealed that 61% of SMBs were the target of a Cyberattack in 2021.

Common Types of Data Breaches

Various types of data breaches target SMBs, all of which are damaging and costly to recover from. The most common examples include:

• Phishing: Phishing exploits employees through deceptive tactics to get them to share sensitive information, such as usernames and passwords, credit card details, or other important credentials.
• Ransomware: Ransomware attacks usually come through a sudden message and involve encrypting data, denying access to your data, and demanding payment.
• Malware: Malware uses malicious software to harm a computer, network, or server.
• Insider Threats: Insider threats can be intentional or unintentional and occur when individuals with authorized access misuse their privileges to harm the organization, such as current or former employees, business partners, or board members.

Impacts of a Data Breach

Data breaches have devastating consequences , especially for SMBs. Immediate impacts can include significant financial losses, operational disruption from loss of access to critical systems and data, damage to reputation and client trust, and legal and regulatory consequences such as fines and litigation from non-compliance with data protection regulations.

In addition to the immediate impacts, long-term effects can make it challenging for SMBs to recover from a data breach. Firstly, SMBs tend to lose customers after a data breach and may need help drawing in new customers. Secondly, the substantial recovery cost can result in an SMB filing for bankruptcy or closing its doors. According to the National Cybersecurity Alliance , 60% of small businesses shut down within six months of a major data loss and 72% within two years. Lastly, data breaches can strain company growth in several ways, such as loss of customer base and consumer trust, damaged reputation, and increased operational costs.

Safeguarding Your SMB Against Data Breaches

Every business should evaluate whether its data breach response plan incorporates thorough information security and governance measures. Insufficient IT breach preparedness heightens the risk of fines, civil, criminal, and class action lawsuits, lost sales, damage to business reputation, and even potential incarceration.

Don’t wait until it’s too late—protect your SMB from a data breach with these actionable steps:

• Invest in cybersecurity tools such as anti-virus, firewalls, and encryption software.
• Implement regular employee training to mitigate phishing risks and reduce human error.
• Identify vulnerabilities with regular security audits and assessments before someone can exploit them.
• Develop a thorough Incident Response Plan outlining steps to take immediately after a breach to minimize damage.
• Invest in cyber insurance for financial protection in the event of a breach.

Partnering with a third-party security provider gives SMBs access to advanced tools and expertise beyond what they can manage internally. These providers offer turnkey solutions that monitor and respond to threats in real-time, along with comprehensive assessments to determine whether an actual breach occurred and, if one has, its nature and extent—relieving some of the stress associated with cybersecurity.

Conclusion

Cybersecurity is not just an IT issue; it’s a critical business priority essential to your success. Data breaches are an increasing threat to organizations of all sizes, especially SMBs, so be proactive and prepare for the worst. By taking steps now, you can avoid devastating financial and reputational damage.

Access provides industry-leading solutions that extend protection so that you are prepared and have assistance at your fingertips should a data breach happen at your organization or your employees.? After assessing your current data security measures and identifying gaps, it may help to have a trusted, reliable partner to help you manage your risk and facilitate recovery.

For more insight on selecting the right partner for your organization, check out our eBook, From Vendor to Partner: How the Right Records and Information Management Provider Can Transform Your Program .