Impact of Cyber Security Threats on Small Businesses

There was a drastic rise in the volume and creativity of hacks with large enterprises such as Tesco Bank, Yahoo, and LinkedIn hitting the headlines as victims of cyber attacks. However, small businesses were not immune to these cyber attacks as well. While the likelihood of some types of cyber attacks is slim, the chances of a small enterprise recovering from an attack are much lower as opposed to large enterprises.

Security breaches can have unique impact on each company. Much depends on the industry in which an enterprise operates and the duration of the attack. For example, a data breach may have more dire consequences for the banking sector than the manufacturing industry. Here are the impacts of a security breach on small business.

Financial Losses

Cybercrime can have pronounced financial impact on small businesses than large enterprises. The economic impact of a breach on large enterprises can result in loss of millions. However, the monetary implications of a security breach on a large corporation are a blip on the radar due to their scale. It can cost a small business approximately $38,000 to recover from a single cyber attack. A single security breach could put you out of business.

Operational Disruption

Besides economic costs of a security breach, there are several intangible costs that a business can accrue after the occurrence of an attack. Businesses that rarely have resilience and continuity strategies often tend to underestimate the impact of operational disruption. An enterprise that already struggles to sustain itself may experience hardship in re-paying its debts. It is essential that smaller firms are protected with sufficient small business insurance to keep afloat in the event of an breach.


Financial losses may not be enough punishment. In fact, there is the likelihood of fines for enterprises that fail to adhere to the data protection legislation. Global authorities are considering strict adherence to data protection legislation. The European Parliament has proposed one of the most draconian measures for a privacy breach that will become effective from May 2018. Small enterprises will have to pay a fine of 20 million Euros for a privacy breach. That will threaten many budding enterprises with insolvency.

Data protection laws require businesses to secure all its confidential data. You may face regulatory sanctions if this data gets comprised either deliberately or accidentally. Therefore, it is crucial for every entrepreneur to deploy appropriate security measures to mitigate cyber attacks.


While a large financial institution may mitigate a cyber raid, defenses of budding enterprises are less sophisticated and easier to penetrate. As a result, small businesses have become a softer target for cyber attackers. While cyber attacks can result in monetary losses, stolen data can be a blow to a company, especially if the attacker shares your login credentials with the neighbors. For example, the value of stolen online auction accounts and login credentials in 2015 was approximately $1,400. The impact of data theft can be equally damaging. In fact, companies can lose their competitive advantage, years of effort, and copyrighted material.

Damaged Reputation

One of the most harmful impacts of a security breach can be the loss of stakeholder and customer trust. Many people are not willing to transact with a company that has been raided by hackers, especially if it failed to protect confidential customer data. That can result in devaluation of the brand that you took years to build. It could also translate into a loss of business. Damaged reputation may also make it hard for an enterprise to attract suppliers, investors, and top talent.

Cyber raids can be devastating even to the most resilient businesses. As such, it is critical for companies to mitigate potential security breaches accordingly. You can deploy security incident plan after an attack to manage the risks. It can help you clean up the compromised systems and reduce the impact of the attack. An incident response plan also helps restore your business in the shortest time possible. You can also mitigate the risks by investing in ongoing user training and awareness in your organization.

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